The domestic currency recovered from its single-day drop on Wednesday and rose 22 paise to 74.76 against the US dollar in opening trade on Thursday.
At the interbank foreign exchange, the rupee opened at 74.77 against the dollar, then inched higher to 74.76 registering a rise of 22 paise over its previous close.
On Wednesday, the Indian rupee suffered its biggest single-day drop in six months, losing 54 paise against the US dollar to end at 74.98.
Forex traders said market participants remain cautious also ahead of the important RBI policy statement that is scheduled to be released this Friday.
The Reserve Bank's rate-setting panel started its three-day deliberations on the next bi-monthly monetary policy on Wednesday, amid rising global commodity prices and the need to contain inflation at home.
The decision of the six-member Monetary Policy Committee (MPC) would be announced on Friday by RBI Governor Shaktikanta Das.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04 per cent to 94.22.
Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 802.81 crore, as per exchange data.
On the domestic equity market front, BSE Sensex was trading 541.8 points or 0.92 per cent higher at 59,731.53, while the broader NSE Nifty advanced 162.90 points or 0.92 per cent to 17,808.90.
Global oil benchmark Brent crude futures fell 0.47 per cent to $80.70 per barrel.
(With PTI inputs)
