The rupee appreciated 8 paise to 88.62 against the US dollar in early trade on Thursday amid a weak American currency and lower level of crude oil prices overseas.
Positive sentiment in domestic equity markets also supported the Indian currency even though selling pressure from foreign investors prevented a sharp gain, forex traders said.
At the interbank foreign exchange, the rupee opened at 88.51 and went up to 88.49 before trading at 88.62 against the greenback in early deals, up 8 paise from its previous closing level.
The domestic unit had settled with a gain of 7 paise at 88.70 against the dollar on Tuesday. The foreign exchange markets were closed on Wednesday on account of the Prakash Gurpurab holiday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.16 % to 99.90.
Brent crude, the global oil benchmark, rose marginally by 0.17 % to $ 63.63 per barrel in futures trading.
In the domestic equity market, Sensex climbed 321.81 points or 0.39 % to 83,780.96 in early trade while Nifty rose 57.05 points or 0.22 % to 25,654.70.
Foreign institutional investors sold equities worth ₹ 1,067.01 crore on Tuesday, according to exchange data.
