The rupee on Thursday opened 23 paise higher at 71.43 against the US dollar amid firm Asian equities and rise in crude oil prices.
The domestic unit on Wednesday recovered from initial losses to settle higher by 5 paise at 71.66, extending gains for a fifth straight session on the back of firm domestic equities and Asian currencies like the Chinese yuan.
Forex traders said the uptick in domestic stocks enthused investors, following which the domestic unit gained strength and recovered from early losses.
"Rupee is driven more by global factors rather than domestic factors. Since Chinese yuan has stabilised in the last 3-4 sessions, the rupee has appreciated," PTI reported quoting Rushabh Maru, Research Analyst - Currency and Commodity, Anand Rathi Shares and Stock Brokers, as saying.
Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 188.08 crore on Monday, according to provisional exchange data.
"Market participants have been cautious ahead of the release of inflation and industrial production number. Both the numbers are expected today and better-than-expected numbers could support the rupee. Today, USD/INR pair is expected to quote in the range of 71.40 and 71.95," said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL).
On the global front, Asian stocks rose on Thursday on hopes for a thaw in US-China trade frictions and expectations that the European Central Bank will kick off another wave of monetary easing by global central banks. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 per cent and Japan's Nikkei stock index rose 1 per cent. Australian shares were up 0.41 per cent, Reuters reported.
In currency market, the US dollar briefly rose to a six-week high of 108.04 yen before paring gains slightly to trade up 0.12 per cent at 107.36 yen while the euro held steady at $1.1013 but traded near a one-week low. In commodities, Brent crude futures rose 41 cents, or 0.7%, to $61.22 by 06:21 am, while US West Texas Intermediate (WTI) futures gained 40 cents, or 0.7 per cent, at $56.16, the Reuters report added.