The rupee gained 24 paise to 81.73 against the US dollar in early trade on Monday.
Forex traders said foreign fund inflows also supported the local unit.
On the interbank currency, the domestic unit opened at 81.85 per dollar, later rising to 81.73, up 24 paise from its previous close.
On Friday, the rupee closed at 81.97 against the US currency.
Forex traders said the rupee could be positive on improving global risk sentiment and fresh inflows of foreign funds.
Moreover, weaker crude oil prices and lower dollar index may also support the national currency, they added.
At the same time, the dollar index, which shows the strength of the dollar against a basket of six currencies, decreased by 0.09 percent and reached 104.43.
Brent crude oil futures, which is considered the world standard of oil, decreased by 0.70 percent and amounted to 85.23 dollars per barrel.
In the domestic equity market, the 30-share BSE Sensex was up 564.81 points, or 0.94 percent, at 60,373.78. The broader NSE Nifty was up 166.95 points, or 0.95 percent, at 17,761.30.
Foreign institutional investors (FIIs) were net buyers in the capital market on Friday as they bought shares worth Rs 246.24 crore, according to stock exchange data.
(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)
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