The Indian rupee appreciated by 6 paise to 71.37 against the US dollar in early trade on Tuesday tracking gains in domestic equity market and easing crude oil prices.
Forex traders said rupee is trading in a narrow range amid fast-spreading coronavirus outbreak in China stoking fears about more trouble for the global economy.
The Centre on Monday decided to take steps for possible evacuation of over 250 Indians from Chinese city of Wuhan, the epicentre of the coronavirus outbreak, and announced a raft of precautionary measures to deal with suspected cases.
In India, no case has been detected so far though nearly 450 people have been kept under observation in the country.
At the interbank foreign exchange the rupee opened at 71.37, registering a rise of 6 paise over its previous close.
On Monday, rupee had settled for the day at 71.43 against the US dollar.
The domestic unit, however, could not hold on to the gains and was trading at 71.38 against the dollar at 0959 hrs.
Domestic bourses opened on a positive note on Tuesday with benchmark indices Sensex trading 84 points higher at 41,239.12 and Nifty up 26.80 points at 12,145.80.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 438.85 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.61 per cent to trade at 58.96 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.02 per cent to 97.93.
The 10-year government bond yield was at 6.57 per cent in morning trade.