The Indian rupee appreciated by 20 paise to 72.04 against the US dollar in early trade on Monday tracking positive opening in domestic equities and weakening of the American dollar in the overseas market.
At the interbank foreign exchange the rupee opened at 72.09, then gained further ground and touched a high of 72.04 against the US dollar, registering a rise of 20 paise over its previous close.
The domestic currency, however, could not hold on to the gains and was trading at 72.18 against the American unit at 0957 hrs.
On Friday, rupee had settled at 72.24 against the greenback.
Meanwhile, investor sentiment remained fragile amid concerns over the impact of coronavirus outbreak on the global economy, forex traders said.
The number of deaths globally in the new coronavirus outbreak passed 3,000 on Monday, as China reported 42 more deaths.
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Domestic bourses opened on a positive note on Monday with benchmark indices Sensex trading 616.44 points higher at 38,913.73 and Nifty up by 183.05 points at 11,384.80.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 1,428.74 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 3.46 per cent to USD 51.39 per barrel. Despite the rise, Brent crude prices are trading on a muted note, traders said.
Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies was trading 0.15 per cent lower at 97.98.
The 10-year government bond yield was at 6.34 per cent in morning trade.