The rupee appreciated 20 paise to 75.71 against the US dollar in early trade on Tuesday as initial success in COVID-19 vaccine trial boosted investor sentiment world over.
Forex traders said besides the encouraging results in COVID-19 vaccine trial, higher opening of domestic equities and weakening American currency supported the local unit.
At the interbank foreign exchange, the rupee opened at 75.71, registering a rise of 20 paise over its previous close.
On Monday, the rupee had settled at 75.91 against the US dollar.
The rupee opened with gains this Tuesday amid improving risk appetite after encouraging data from the trial of a vaccine for COVID-19. Initial data from Moderna Inc's COVID-19 vaccine showed that it produced protective antibodies in a small group of healthy volunteers," Reliance Securities said in a research note.
Moreover, optimism about resumption in economic activity could aid sentiments after shops and restaurants re-opened in Italy, while other centres of the outbreak such Spain and Portugal will gradually lift restrictions, it added.
The Indian government on Sunday extended the coronavirus lockdown for two more weeks with the fourth phase providing more relaxations outside containment zones.
Domestic bourses were trading on a positive note on Tuesday with the benchmark Sensex surging 571.51 points to 30,600.49 and broader Nifty rising 165.60 points to 8,988.85.
Foreign institutional investors were net sellers in the capital market, as they offloaded equity shares worth Rs 2,512.82 crore on Monday, according to provisional exchange data.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02 per cent down at 99.64.
Meanwhile, in India, the death toll due to COVID-19 rose to 3,163 and the number of cases climbed to over 1.01 lakh, according to the health ministry.
The number of cases around the world linked to the disease has crossed over 48.05 lakh and the death toll has topped 3.18 lakh.
Meanwhile, Brent crude futures, the global oil benchmark, rose 0.34 per cent to USD 34.93 per barrel.