The rupee strengthened by 15 paise to 73.33 against the US dollar in opening trade on Tuesday as weak American currency and positive domestic equities strengthened investor sentiment.
At the interbank forex market, the domestic unit opened at 73.33 against the US dollar, registering a rise of 15 paise over its previous close.
On Monday, the rupee had settled at 73.48 against the US dollar.
Forex traders said news related to coronavirus vaccine and sustained foreign fund inflows aided to positive sentiment.
"Global risk sentiment is holding up on hopes of a vaccine becoming available by the end of 2020. US equities ended the session with gains of around 1 per cent," said Abhishek Goenka, Founder and CEO, IFA Global.
Meanwhile, retail inflation softened slightly to 6.69 per cent in August as price rise in some food items eased.
"Domestic consumer prices rose 6.69 per cent in August, lower than market expectations but still higher than the RBI upper limit of its tolerance band of 4-6 per cent. Since a higher print was already expected, the bond market should take the data in its stride," Goenka said.
The dollar index, which gauges the greenback''s strength against a basket of six currencies, fell 0.18 per cent to 92.88.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 141.59 points higher at 38,898.22, and the broader NSE Nifty advanced 43 points to 11,483.05.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 298.22 crore on a net basis on Monday, according to exchange data.
Brent crude futures, the global oil benchmark, fell 0.08 per cent to USD 39.58 per barrel.