The Indian rupee appreciated by 48 paise to 76.20 against the US dollar in early trade on Thursday tracking positive opening in domestic equities and rebound in most Asian currencies.
Forex traders said higher opening of domestic equities supported the local unit, while sustained foreign fund outflows and concerns over coronavirus outbreak weighed on the currency.
At the interbank foreign exchange, the rupee opened at 76.31, then gained ground and touched 76.20, registering a rise of 48 paise over its previous close.
On Wednesday, rupee had settled at 76.68 against the US dollar.
"Rupee could likely be quoted at around 76.50-76.55 per dollar in early trades on Thursday," Reliance Securities said in a research note.
Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies, was trading 0.02 per cent up at 100.40.
"US Dollar started flat on Thursday morning in Asian trade as the coronavirus outbreak is driving a global depression, which will encourage investors to opt for the safety of holding their funds in dollars," Reliance Securities added.
Traders said investor sentiments remained fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as global economy.
The number of cases around the world linked to the new coronavirus has crossed over 26 lakh. In India, over 21,300 coronavirus cases have been reported so far.
Meanwhile, domestic bourses were trading on a positive note on Thursday with benchmark indices Sensex trading 277.69 points higher at 31,657.24 and Nifty up by 71.35 points at 9,258.65.
Foreign institutional investors remained net sellers in the capital market, as they sold equity shares worth Rs 1,326.09 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 7.61 per cent to USD 21.92 per barrel.