MUMBAI: The rupee rose 11 paise to 90.23 against the US dollar in early trade on Friday on positive investor sentiments as traders keenly awaited the RBI's MPC announcement.
However, FII outflows, rise in crude oil prices, and a marginally stronger greenback capped sharper gains in the local unit, according to forex traders.
At the interbank foreign exchange, the rupee opened at 90.28 against the greenback before rising to 90.23, up 11 paise from its previous close.
On Thursday, the rupee appreciated 13 paise to close at 90.34 against the US dollar.
"The Reserve Bank of India will announce its monetary policy today... and the tone of the language will be of interest to traders for future guidance," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent higher at 97.85.
"The dollar index further rose but was unable to cross 98 levels this (Friday) morning as the labour data was not strong enough," Bhansali said.
Brent crude, the global oil benchmark, was trading 0.33 per cent higher at USD 67.77 per barrel in futures trade.
On the domestic equity market front, Sensex fell 225.15 points to 83,088.78 in early trade, while Nifty was down 89.25 points to 25,553.55.
Foreign Institutional Investors turned net sellers after two days and offloaded equities worth Rs 2,150.51 crore on Thursday, according to exchange data.