The rupee appreciated 16 paise to 72.33 against the US dollar in opening trade on Tuesday tracking positive domestic equities and strong Asian currencies.
At the interbank forex market, the domestic unit opened at 72.36 against the US dollar and inched higher to 72.33 against the greenback, registering a rise of 16 paise over its previous close.
On Monday, the rupee had settled at 72.49 against the American currency.
Weak US dollar, strong Asian currencies and foreign portfolio investment (FPI) flows into the markets could lend support to the domestic currency, Reliance Securities said in a research note.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.01 per cent to 90.00.
"The US dollar Index has started weaker this Tuesday morning in Asian trade as investors' focus shifted to how US Federal Reserve chief Jerome Powell might respond to resurgent inflation expectations," the Reliance Securities note said.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 225.96 points higher at 49,970.28, and the broader NSE Nifty advanced 72.25 points to 14,747.95.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 893.25 crore on Monday, according to exchange data.
Brent crude futures, the global oil benchmark, advanced 1.59 per cent to USD 66.28 per barrel.
For in-depth, objective and more importantly balanced journalism, Click here to subscribe to Outlook Magazine