The rupee recovered 32 paise to 75.28 in early trade on Friday tracking positive domestic equities and stronger Asian peers.
The local currency opened on a strong note at 75.31 to a dollar at the interbank foreign exchange market and inched higher to 75.28, registering a gain of 32 paise over its previous close.
Forex traders said markets will continue to remain volatile, and investors continued to keep a watch on the latest developments in eastern Europe.
On Thursday, the rupee tanked 99 paise to close at 75.60 against the US dollar, as riskier assets took a hit after Russia launched military operations against Ukraine.
Meanwhile, European Union leaders are putting on a united front and agreed on a second package of economic and financial sanctions on Russia.
The EU Council president accused Russia of using "fake pretexts and bad excuses" for justifying its invasion of Ukraine and said sanctions will hurt the government.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.36 per cent lower at 96.78. The rupee opened stronger against the US dollar this Friday tracking a rebound in Asian equities and a slight pullback on the dollar index, said Sriram Iyer, Senior Research Analyst at Reliance Securities.
"Crude oil prices were still stronger and could cap appreciation, however, most of the Asian and emerging peers were stronger against the US Dollar and could lift sentiments," Iyer noted.
Global oil benchmark Brent crude futures rose 2.40 per cent to USD 101.46 per barrel. On the domestic equity market front, the 30-share Sensex was trading 1,234.81 points or 2.26 per cent higher at 55,764.72, while the broader NSE Nifty advanced 380.35 points or 2.34 per cent to 16,628.30.
Foreign institutional investors were net sellers in the capital market on Thursday, as they offloaded shares worth Rs 6,448.24 crore, as per stock exchange data.
(With PTI inputs)