The rupee appreciated 12 paise to 74.15 against the US dollar in opening trade on Friday, supported by positive opening in domestic equities and weakness in American currency.
At the interbank forex market, the domestic unit opened at 74.15 against the US dollar, registering a rise of 12 paise over its previous close.
On Thursday, the rupee had settled at 74.27 against US dollar.
Traders said sustained foreign fund inflows into the domestic equity markets also helped the local unit.
"Investment into the domestic equity and debt markets has already crossed USD 6 billion this month and there is still about one week of trading left in the month," Reliance Securities said in a research note.
"However, these flows are being continuously mopped up by the central bank, which could limit appreciation bias of the local unit," the research note said adding that markets are also factoring in that the US Federal Reserve may further loosen monetary policy in December as fiscal stimulus plans remaining uncertain.
The US Fed’s next meeting is scheduled between December 15 and 16.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02 per cent down at 92.28 amid reports that US Senate Republican leaders have agreed to resume negotiations on another coronavirus stimulus package.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 196.78 points higher at 43,796.74 and broader NSE Nifty surged 61.80 points to 12,833.50.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,180.61 crore on a net basis on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.29 per cent to USD 44.33 per barrel.