The rupee strengthened by 12 paise to 77.93 against the US dollar in opening trade on Monday as easing crude oil prices supported the local unit.
However, unabated foreign fund outflows, a lacklustre trend in domestic equities and strong American dollar overseas restricted the gain, forex dealers said.
At the interbank foreign exchange, the rupee opened strong at 77.98 against the US dollar, then inched higher to quote 77.93, registering a rise of 12 paise over the last close.
In the previous session, the rupee advanced 5 paise to settle at 78.05 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.30 percent to 104.38.
Global oil benchmark Brent crude futures slipped 0.26 percent to USD 112.83 per barrel.
The Indian Rupee opened slightly stronger against the US currency after crude oil prices suffered the biggest decline in more than a month on concerns over the demand outlook amid weak economic prospects, said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Meanwhile, most of the Asian and emerging market peers have started marginally stronger on Monday morning and supported the local unit.
However, dollar remained elevated, and persistent portfolio outflows could keep the rupee's appreciation bias capped, Iyer noted.
On the domestic equity market front, the 30-share Sensex was trading 85.22 points or 0.17 percent lower at 51,275.20, while the broader NSE Nifty fell 39.35 points or 0.26 percent to 15,254.15.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 7,818.61 crore, as per exchange data.
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