The Indian rupee appreciated by 26 paise to 75.87 against the US dollar in early trade on Tuesday tracking positive opening in domestic equities.
Forex traders said higher opening in domestic equities supported the local unit, while sustained foreign fund outflows and concerns over coronavirus outbreak weighed on the local unit.
At the interbank foreign exchange the rupee opened at 75.92, then gained ground and touched 75.87, registering a rise of 26 paise over its previous close.
On Friday, rupee had settled at 76.13 against the US dollar.
The forex market was closed on Monday on account of Mahavir Jayanti.
Traders said investor sentiments remain fragile amid concerns over the impact of coronavirus outbreak on the domestic as well as global economy.
The number of deaths around the world linked to the new coronavirus has crossed over 74,000. In India, over 4,400 coronavirus cases have been reported so far.
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Meanwhile, domestic bourses opened on a positive note on Tuesday with benchmark indices Sensex trading 1127.33 points higher at 28,718.28 and Nifty up by 344.95 points at 8,428.75.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 1,960.97 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 2.90 per cent to USD 34.01 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies was trading 0.13 per cent down at 100.55.