The rupee appreciated 2 paise to 83.38 against the US dollar in early trade on Tuesday, tracking a weak American currency and inflow of foreign funds in the domestic equities.
Forex traders said, positive sentiment in the domestic equity markets and lower crude oil price also favoured the Indian currency.
At the interbank foreign exchange, the rupee opened at 83.37 against the dollar and then touched 83.38, registering a gain of 2 paise over its previous close.
On Friday, the rupee settled at 83.40 against the American currency. The forex market remained closed on Monday on account of Guru Nanak Jayanti.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.06 per cent at 103.14.
Global oil benchmark Brent crude futures rose 0.28 per cent to USD 80.20 per barrel.
On the domestic equity market front, the BSE Sensex was trading 58.68 points or 0.09 per cent higher at 66,028.72, while the broader NSE Nifty rose 36.80 points or 0.19 per cent to 19,831.50.
Foreign institutional investors were net buyers in the capital market on Friday as they purchased shares worth Rs 2,625.21 crore, according to exchange data.
Also, the country's forex reserves increased by USD 5.077 billion to USD 595.397 billion during the week ended November 17, the Reserve Bank said on Friday.