The rupee appreciated 6 paise to 82.34 against the US dollar in early trade on Wednesday as a firm trend in domestic equities strengthened investor sentiment.
However, persistent foreign capital outflows capped the gains of the local unit, forex traders said.
At the interbank foreign exchange, the domestic unit opened strong at 82.32 against the dollar, then lost some ground to quote at 82.34, a gain of 6 paise over its previous close.
In the previous session on Tuesday, the rupee slipped 10 paise to end at 82.40 against the dollar
The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.06 per cent to 112.06.
Brent crude futures, the global oil benchmark, rose 0.59 per cent to USD 90.56 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 258.72 points or 0.44 per cent higher at 59,219.32. Similarly, the broader NSE Nifty rose 69.30 points or 0.40 per cent to 17,556.25.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets as they offloaded shares worth Rs 153.40 crore on Tuesday, according to exchange data.