The rupee appreciated by 6 paise to 68.92 against the US dollar in early trade on Thursday amid a positive opening in the domestic equity market.
Forex traders said heavy buying in the domestic equity market supported the domestic unit. However, foreign fund outflows and rising crude oil prices weighed on the local currency.
Besides, the rupee is expected to trade in a narrow range ahead of the crucial European Central Bank (ECB) policy statement to be released later on Thursday.
At the interbank foreign exchange market, the rupee opened at 68.99, then gained momentum and touched a high of 68.92, registering a rise of 6 paise over its previous close. The domestic unit was trading at 68.96 against the dollar at 0949 hrs.
The domestic currency had settled at 68.98 against the US dollar on Wednesday.
Other major global cues that are going to dictate terms to the rupee include the US second quarter preliminary GDP print on Friday and the Federal Open Market Committee (FOMC) meeting on July 31, traders said.
Meanwhile, foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,393.71 crore on Wednesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.19 per cent to trade at $63.30 per barrel. Domestic bourses opened on a bullish note on Thursday, with benchmark indices, Sensex trading 320.35 points higher at 38,168.00 and Nifty up 83.60 points at 11,354.90.
Meanwhile, market participants are betting on the US and China trade talks next week. The US and Chinese officials are restarting negotiations in Shanghai on Tuesday and on Wednesday, in an effort to resolve the year-long trade dispute.