The rupee appreciated by 16 paise to 70.65 against the US dollar in early trade on Monday as easing crude prices and sustained foreign fund inflows strengthened investor sentiments.
Market participants said higher opening in domestic equity market, and hopes for a US-China trade deal also supported the local currency.
At the interbank foreign exchange, the rupee opened strong at 70.55, registering a rise of 26 paise over its previous close of 70.81. It, however, pared some gains and was trading at 70.65 against the dollar in morning trade.
On Friday, the rupee had finished at 70.81 against the US currency.
Brent crude futures, the global oil benchmark, fell 0.52 per cent to USD 59.69 per barrel.
Foreign institutional investors (FIIs) pumped a net Rs 533.37 crore into equities on Friday, provisional exchange data showed.
BSE Sensex rallied over 269 points to hit its intra-day peak of 40,434.83 in early trade. The broader NSE Nifty advanced 75.85 points to 11,966.45, inching closed to the 12,000 mark.
Comments of Chinese Vice Premier Liu He that trade talks with Washington were on track, and speculation that US and China will sign the trade pact this month enthused investors.
Besides, strong US jobs data also revived investors' sentiment globally.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.06 per cent to 97.18.
The 10-year government bond yield was at 6.44 per cent in morning trade.