The Indian rupee appreciated 4 paise to 73.25 against the US dollar in opening trade on Tuesday, tracking a positive trend in domestic equities.
At the interbank foreign exchange, the rupee opened at 73.26 against the dollar, then inched higher to 73.25, up 4 paise over its previous close.
On Monday, the rupee had settled at 73.29 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.12 per cent at 92.54.
A strong rally in the domestic equity markets and a weak American currency in the overseas markets also supported the rupee sentiment.
According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, the rupee which has appreciated nearly 100 paise since Friday, has been gaining on bountiful corporate inflows.
"RBI has been present intermittently and equity inflows have also been aiding the rupee after FED rhetoric on Friday," he added.
The US Fed chief Jerome Powell's speech at Jackson Hole Symposium was 'dovish' and expressed hope that the Fed will keep supporting the market with low interest rates, traders said.
Global oil benchmark Brent crude futures fell 0.48 per cent to USD 73.06 per barrel.
On the domestic equity market front, BSE Sensex was trading 87.09 points or 0.15 per cent higher at 56,976.85, while the broader NSE Nifty advanced 21.55 points or 0.13 per cent to 16,952.60.
Foreign institutional investors were net buyers in the capital market on Monday as they purchased shares worth Rs 1,202.81 crore, as per exchange data.