The local unit was strengthened by 12 paise to 77.93 against the US dollar in opening trade on Monday as easing crude oil prices supported the local unit.
The gains were restricted by unabated foreign fund outflows, a lacklustre trend in domestic equities and strong American dollar overseas, according to forex dealers.
The foreign exchange opened strong at 77.98 against the US dollar, then moved higher to quote 77.93, registering a rise of 12 paise over the last close.
The dollar index, which gauges the strength of the greenback against a basket of six currencies, fell 0.30 per cent to 104.38.
The global oil benchmark Brent crude futures fell 0.26 per cent to USD 112.83 per barrel.
Sriram Iyer, Senior Research Analyst at Reliance Securities said that the dollar opened slightly stronger against the US currency after crude oil prices suffered the biggest decline in more than a month due to concerns over the demand outlook amid weak economic prospects.
Most of the Asian and emerging market peers supported the local unit after starting marginally stronger on Monday morning.
Iyer noted that the rupee's appreciation bias was capped because of persistent portfolio outflows, and the dollar remained elevated.
On the domestic equity market front, the Sensex was trading 85.22 points or 0.17 per cent lower at 51,275. The NSE Nifty fell 39.35 points or 0.26 per cent to 15,254. Foreign institutional investors offloaded shares worth Rs 7,818, which was net sellers in the capital market on Friday. As per exchange data, 61 crore were reported to have been generated.