The rupee appreciated by 7 paise to 71.21 against the US dollar in opening trade on Wednesday, driven by positive opening in domestic equities.
Forex traders said positive opening in domestic equities supported the local unit, while rising crude prices, foreign fund outflows and strengthening of the American currency weighed on rupee and restricted its upmove.
Moreover, rupee continued to consolidate in a narrow range ahead of inflation and industrial production figures scheduled to be released later in the day, they added.
The rupee opened strong at 71.24 at the interbank forex market then gained further ground to touch 71.21 per dollar, displaying gains of 7 paise against the greenback.
On Tuesday, the rupee had settled at 71.28 against the US dollar.
The benchmark BSE Sensex was trading with gains of 370.21 points, or 0.90 per cent to quote at 41,586.35 while the NSE Nifty was trading at 12,205.30, up 97.40 points, or 0.08 per cent.
Foreign institutional investors sold equities worth Rs 209.39 crore on a net basis on Tuesday, according to provisional exchange data.
Meanwhile, brent crude, the global benchmark, was trading at USD 54.97 per barrel higher by 1.78 per cent.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.04 per cent to 98.75.
The 10-year government bond yield was at 6.48 per cent in morning trade.