The Indian rupee rose 7 paise to 71.14 against the US dollar in opening trade on Friday, buoyed by sliding oil prices and a firm trend at global markets.
At the interbank foreign exchange market, the rupee opened marginally lower at 71.25 but soon stabilised to trade at 71.14.
The domestic unit had surged 48 paise to close at 71.21 against the US dollar on Thursday as investors cheered easing tensions between the US and Iran.
Meanwhile, US President Donald Trump on Thursday said Iran will never have a nuclear weapon, adding that Tehran was getting "hurt very badly" by US sanctions.
In what could open another front in the Mideast conflict, Canadian Prime Minister Justin Trudeau said multiple intelligence sources indicate that Iran shot down a Ukrainian airliner after it took off from Tehran, killing all 176 on board, including 63 Canadians.
However, Tehran alluded to "doubtful scenarios" and urged Canada to share its information.
World markets soared to record highs on Friday as investors looked beyond the Mideast volatility and focused on the upcoming US-China trade deal signing.
Global oil benchmark Brent crude futures slipped 0.23 per cent to USD 65.21 per barrel.
Domestic equity benchmark BSE Sensex jumped nearly 200 points in early trade on Friday led by gains in IT and banking stocks.
After hitting a high of 41,647.60, the 30-share BSE index was trading 124.70 points or 0.30 per cent higher at 41,577.05. Similarly, the broader NSE Nifty advanced 37.25 points or 0.30 per cent to 12,253.15.
Foreign funds sold shares worth a net Rs 431.11 crore on Thursday, provisional exchange data showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 97.42.