The rupee appreciated by 6 paise to 83.31 against the US dollar on Tuesday, amid softening crude oil prices in the international market.
Forex traders said, however, the local unit faced some resistance due to subdued sentiment in the domestic equity market and a stronger American currency.
At the interbank foreign exchange market, the local unit opened strong at 83.32 and inched up further to trade at 83.31 against the greenback, registering a gain of 6 paise from its previous closing level.
On Friday, the rupee had settled 13 paise higher at 83.37 against the US dollar. The forex markets were closed on Monday, on account of general elections.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 104.57, higher by 0.11 per cent.
Analysts attributed the strengthening dollar to higher US treasury yields even as the Federal Reserve has indicated that it needs more time to assess the progress on inflation.
Brent crude futures, the global oil benchmark, declined 0.54 per cent to $83.26 per barrel.
On the domestic equity market, the 30-share BSE Sensex was trading 71.18 points, or 0.10 per cent, lower at 73,934.76 points. The broader NSE Nifty was down 12.00 points, or 0.05 per cent, to 22,490.00 points.
Foreign Institutional Investors (FIIs), were net sellers in the capital markets during a special trading session on Saturday, as they offloaded shares worth ₹92.95 crore, according to exchange data.