The rupee gained 10 paise to 82.30 against the US dollar in early trade on Friday on broad dollar weakness and a positive trend in domestic equities.
At the interbank foreign exchange, the domestic unit opened at 82.31 against the dollar and then rose to 82.30, registering a gain of 10 paise over its previous close.
On Thursday, the rupee closed at 82.40 against the US currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.08 per cent to 103.47.
Brent crude futures, the global oil benchmark, advanced 0.65 per cent to USD 74.76 per barrel.
Forex traders said risk-on sentiments have improved and Asian currencies are trading on a stronger note against the American dollar.
"With strong data coming in from the US and Eurozone, risk sentiment seems to be positive," IFA Global Research Academy said, adding that the US dollar has weakened across the board and Asian currencies are 0.2-0.9 per cent stronger against the dollar.
Besides, positive macroeconomic data supported the local unit, traders said.
According to official data released on Thursday, GST collections crossed Rs 1.50 lakh crore for the third month in a row, recording a 12 per cent increase in May at over Rs 1.57 lakh crore.
Moreover, manufacturing activities in India advanced further and touched a 31-month high in May supported by stronger increase in new orders and favourable market conditions.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose from 57.2 in April to 58.7 in May.
In the domestic equity market, the 30-share BSE Sensex advanced 151.98 points or 0.24 per cent to 62,580.52. The broader NSE Nifty rose 48.95 points or 0.26 per cent to 18,536.70.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Thursday as they offloaded shares worth Rs 71.07 crore, according to exchange data.
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