The rupee appreciated 17 paise to 82.17 against the US dollar on Friday as foreign capital inflows and a rally in domestic stocks bolstered investor sentiment.
Besides, easing global crude oil prices and rising appetite for riskier assets also supported the domestic unit, forex traders said.
However, a strong dollar against major rivals overseas ahead of US inflation data capped the rupee's gain, they added.
At the interbank foreign exchange market, the domestic unit opened strong at 82.12 and touched an intra-day high of 82.09 and a low of 82.26 against the greenback.
The local unit quoted at 82.17 at 1530 hrs, registering a gain of 17 paise over its previous close of 82.34.
The forex market was closed on Thursday for Ram Navami.
The dollar index gained 0.25 per cent to 102.08 ahead of the release of the US inflation data later in the day.
On the domestic equity market front, BSE Sensex rose 1,031.43 points or 1.78 per cent to end at 58,991.52 while NSE Nifty advanced 279.05 points or 1.63 per cent to 17,359.75.
Brent crude futures fell 0.24 per cent to $79.08 per barrel.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Wednesday as they bought shares worth Rs 1,245.39 crore, as per exchange data.