The Indian rupee appreciated by 33 paise to 70.50 against the US dollar in early trade on Friday as gains in domestic equity market and positive developments on the US-China trade talk front strengthened investor sentiments.
Forex traders said the news that the US and China are very close to reaching a trade deal supported the local unit.
At the interbank foreign exchange the rupee opened at 70.54, then gained further ground and touched a high of 70.50, registering a rise of 33 paise over its previous close.
On Thursday, rupee had settled for the day at 70.83 against the US dollar.
The domestic unit, however, could not hold on to the gains and was trading at 70.53 against the dollar at 0937 hrs.
President Donald Trump on Thursday tweeted that the United States is "VERY close" to a trade deal with China, days before new tariffs are due to take effect.
"Getting VERY close to a BIG DEAL with China. They want it, and so do we!" Trump tweeted.
Besides, Myron Brilliant, the US Chamber of Commerce's head of international affairs, who has been briefed by both the Trump administration and China said "We're close to a deal".
Besides, higher opening in domestic equities supported the local unit.
Domestic bourses opened on a positive note on Friday with benchmark indices Sensex trading 269.32 points higher at 40,851.03 and Nifty up 72.95 points at 12,044.75.
Market participants, said foreign fund outflows and rising crude prices weighed on the local currency.
Foreign institutional investors (FIIs) sold shares worth Rs 683.83 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.72 per cent to trade at USD 64.66 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.64 per cent to 96.77.
The 10-year government bond yield was at 6.83 per cent in morning trade.
On the domestic front, rising food prices pushed the retail inflation in November to over three-year high of 5.54 per cent, while the industrial sector output shrank for third month in a row by 3.8 per cent in October, indicating deepening slowdown in the economy.