The rupee inched up 4 paise to 70.73 against the US dollar in early trade on Tuesday, following increased selling of the American currency by exporters and banks.
However, weak domestic equity market and rising crude prices capped gains for the rupee, forex dealers said.
At the interbank foreign exchange, the rupee opened weak at 70.80. The domestic currency, however, recovered some lost ground to trade at 70.73 in morning trade.
On Monday, the rupee closed at 70.77 against the US currency.
The BSE Sensex pared all gains to trade 41.28 points, or 0.10 per cent, lower at 40,260.68. Similarly, the broader NSE Nifty slipped 13.60 points, or 0.11 per cent, to 11,927.70.
Brent crude futures, the global oil benchmark, rose 0.06 per cent to USD 62.17 per barrel.
On a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 138.53 crore on Monday, provisional exchange data showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, surged 0.09 per cent to 97.59.
The 10-year government bond yield was at 6.48 per cent in morning trade.