The Indian rupee gained 4 paise to trade at 74.79 per dollar on Tuesday amid caution ahead of the two-day US Federal Reserve's meeting. At the interbank forex market, the rupee was trading in a narrow range.
It opened at 74.86 against the US dollar but soon recovered the lost ground and touched 74.79 against the US dollar, up 4 paise over its last close of 74.83.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.14 per cent to 93.80.
Forex traders said firm domestic equities and steady crude oil prices supported the local unit, even as foreign fund outflows and rising COVID-19 cases weighed on investor sentiment.
"Asian currencies were stronger against the US dollar this Tuesday morning and could lift sentiments for the local unit," Reliance Securities said in a research note but added that "markets will remain cautious ahead of the two-day Fed meeting concluding tomorrow".
The number of cases around the world linked to the disease has crossed 1.64 crore and the death toll has topped 6.53 lakh.
In India, the death toll due to COVID-19 rose to 33,425 and the number of infections rose to 14,83,156, according to the health ministry.
On the equities front, the 30-share BSE benchmark Sensex was quoting 145.04 points higher at 38,079.77; and the broader Nifty rose 44.80 points to 11,176.60.
Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 453.31 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.09 per cent to USD 43.45 per barrel.