The rupee appreciated 45 paise to 75.27 against the US dollar in early trade on Friday tracking positive opening of domestic equities and weakness in the American currency.
Forex traders said a positive start of domestic stocks and significant foreign fund inflows supported the local unit.
At the interbank foreign exchange, the rupee opened at 75.36, then gained ground to touch 75.27, registering a rise of 45 paise over its previous close.
On Wednesday, the rupee had settled at 75.72 against the US dollar.
Forex market was closed on Thursday on account of Buddha Purnima.
Domestic bourses were trading on a positive note on Friday with the benchmark Sensex up 456.86 points at 31,900.24 and broader Nifty rising 139.70 points to 9,338.75.
Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs 19,056.49 crore on Thursday, according to provisional exchange data.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.16 per cent down at 99.73.
However, traders said investor sentiment remains fragile amid concerns over the impact of COVID-19 pandemic on the domestic as well as global economy.
In India, the death toll due to COVID-19 rose to 1,886 and the number of cases climbed to 56,342 on Friday, according to the health ministry.
The number of cases around the world linked to the disease has crossed over 38.46 lakh and the death toll has topped 2.69 lakh.
Meanwhile, Brent crude futures, the global oil benchmark, rose 1.36 per cent to USD 29.86 per barrel.