The rupee appreciated by 24 paise to 82.10 in early trade on Friday following foreign fund inflows and a fall in crude oil prices.
Gains in the local stock market and weakness in the US dollar in early Asian trade also boosted the rupee sentiment.
At the interbank foreign exchange market, the rupee opened higher at 82.12 and stayed in the green in early trade. It moved in a range of 82.16 to 82.10 in early deals.
The rupee had closed lower by 18 paise at 82.34 to a dollar on Wednesday. The forex market was closed on Thursday for Ram Navami.
FIIs have turned net buyers in Indian markets following the ebbing of the banking contagion fears. The fact that there have been no further bank failures or major stress in the system has boosted FII flows, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rebounded from early lows to trade 0.05 per cent higher at 102.20. It traded lower at 102.09 in early Asian trade.
Global oil benchmark Brent crude futures declined by 0.24 per cent to $79.08 per barrel.
On the domestic equity market front, the 30-share BSE Sensex spurted by 680.56 points or 1.17 per cent to 58,640.65 while the broader NSE Nifty advanced 191.75 points or 1.12 per cent to 17,272.45 points.
Foreign Institutional Investors (FIIs) turned net buyers in the capital market on Wednesday as they bought shares worth ₹1,245.39 crore, as per exchange data.