The rupee appreciated 6 paise to 74.29 against the US dollar in early trade on Wednesday as strong buying in domestic equities and weakness in American currency overseas strengthened investor sentiment.
However, high crude prices in the international market and foreign capital outflows restricted the rupee rise, forex dealers said.
At the interbank foreign exchange, the rupee opened strong at 74.30 against the dollar, then gained further ground to 74.29, a rise of 6 paise over its previous close.
On Tuesday, the rupee had settled at 74.35 against the US dollar.
On the domestic equity market front, BSE Sensex was trading 281.31 points higher at a fresh all-time high of 56,073.58, while the broader NSE Nifty advanced 76.80 points to record 16,691.40.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent lower at 93.10.
Global oil benchmark Brent crude futures rose 0.38 per cent to USD 69.29 per barrel.
Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 343.73 crore, as per exchange data.
