At the interbank foreign exchange, the rupee opened at 70.90, then gained further ground and touched a high of 70.87 against the US dollar, registering a rise of 27 paise over its previous close.
On Friday, the rupee had settled at 71.14 against the US dollar.
Forex market was closed on Monday on account of assembly elections in Maharashtra.
The domestic unit however could not hold on to the gains and was trading at 70.91 against the dollar at 0949 hrs.
Forex traders said investors were optimistic about the US-China trade talks after US President Donald Trump said that ''phase 1'' China trade pact is on track for November.
Trump said that he expects to sign the partial deal on the sidelines of the Asia-Pacific Economic Cooperation summit in Chile next month when he meets with Chinese President Xi Jinping.
However, cautious opening in domestic equities weighed on the local unit.
Domestic bourses opened on a cautious note on Tuesday with benchmark indices Sensex trading 50.64 points lower at 39,247.74 and Nifty up 4.60 points at 11,666.45.
The dollar index, which gauges the greenback''s strength against a basket of six currencies, fell by 0.02 per cent to 97.31.
Foreign institutional investors (FIIs) remained net buyers in the capital market, putting in Rs 36.56 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, was trading down 0.03 per cent at USD 58.94 per barrel.
The 10-year government bond yield was at 6.54 per cent in morning trade. PTI DRR DRR
Disclaimer :- This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI