The rupee appreciated by 7 paise to 72.98 against the US dollar in opening trade on Friday, tracking positive domestic equities.
The domestic unit opened at 73.01 per US dollar at the interbank forex market and inched higher to 72.98 against the greenback, rising 7 paise over its previous close.
On Thursday, the rupee had settled at 73.05 against the American currency.
Meanwhile, the dollar index, advanced 0.31 per cent to 90.73 against a basket of six currencies.
"The US Dollar Index has started higher this Friday morning in Asian trade. However, upside was capped as an improvement in risk appetite sapped demand for the safe haven dollar with investors taking cheer from US economic data wasn't as bad as feared," Reliance Securities said in a research note.
Asian currencies were trading weak against the greenback and could keep appreciation limited for the rupee, the note added.
Meanwhile, the Economic Survey 2020-21 will be tabled in Parliament on Friday. Markets will be awaiting cues from the Union Budget on Monday.
Market participants will also look for cues from April-December fiscal deficit data and FY20 revised GDP data.
On the domestic equity market front, market indices opened on a bullish note on Friday, amid positive global equities. Reversing from 5 days of fall, Sensex rose 500 points to 47, 300 and Nifty gained by 90 points to 13,980.
Foreign portfolio investors (FPIs) sold shares worth Rs 3,712.51 crore, while domestic institutional investors (DIIs), were net buyers to the tune of Rs 1,736.92 crore in the Indian equity market on 28 January, provisional data showed.
Brent crude futures, the global oil benchmark, rose 0.02 per cent to USD 55.52 per barrel. Oil price again slipped on demand concerns due to fresh travel restriction imposed in some countries due to rising covid cases.
Kshitij Purohit, Product Manager, Currency & Commodities at CapitalVia Global Research said," All major currency like Singapore dollar, Japanese Yen, the Australian dollar traded in the loss against the US dollar this morning due to rise is dollar index. Technically, USDINR pair closed negative against the US Dollar and investor looking for US GDP data tonight, USDINR spot is trading above the phycological level of 73.00 preceding 21-day SMA is currently around 73.10, and above this, it may continue bullish momentum will continue for the day. USDINR Feb future will trade in the range of 73.25 - 73.60 levels."