The rupee appreciated 9 paise to 83.06 against the US dollar in early trade on Monday on the back of positive domestic equity markets and inflow of foreign fund.
However, forex traders said a strong American currency and volatile crude oil prices weighed on the domestic currency.
At the interbank foreign exchange, the domestic currency opened at 83.09, touched the level of 83.04 before trading at 83.06 against the greenback in initial deals, registering a rise of 9 paise from its previous close.
On Friday, the domestic currency settled at 83.15 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.09 per cent higher at 102.22 on Monday.
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Brent crude futures, the global oil benchmark, declined 1.12 per cent to USD 77.88 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 73.62 points or 0.10 per cent higher at 72,099.77. The broader NSE Nifty advanced 25.85 points or 0.12 per cent to 21,736.65.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they bought shares worth Rs 1,696.86 crore, according to exchange data.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 56.9 in November to 59 in December, highlighting a sharp increase in output.
The country's forex reserves jumped by USD 2.759 billion to USD 623.2 billion in the week ended December 29, the Reserve Bank said on Friday.
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