The rupee appreciated 20 paise to 74.45 against the U.S. dollar in opening trade on February 1, supported by positive domestic equities.
However, the surge in the rupee was restricted amid elevated crude oil prices.
Finance Minister Nirmala Sitharaman will present the Union Budget 2022-23 in Parliament soon.
At the interbank foreign exchange, the rupee opened at 74.53 against the American dollar, then inched higher to quote 74.45, registering a rise of 20 paise from the last close.
In the previous session, the rupee had settled at 74.65 against the greenback.
Focus for investors has now shifted to the Union Budget for the next fiscal year, where borrowing numbers and fiscal glide path will be divulged, Sriram Iyer, Senior Research Analyst at Reliance Securities, said.
Most of the Asian peers have started stronger this Tuesday and will aid sentiments, Mr. Iyer said.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.05% lower at 96.59.
On the domestic equity market front, the 30-share Sensex was trading 856.32 points or 1.48% higher at 58,870.49 while the broader NSE Nifty advanced 240.30 points or 1.39% to 17,580.15.
Global oil benchmark Brent crude futures rose 1.31% to $91.21 per barrel.
Foreign institutional investors were net sellers in the capital market on Monday, as they offloaded shares worth ₹3,624.48 crore, as per stock exchange data.