The rupee gained 7 paise to 82.56 against the US dollar in early trade on Tuesday tracking the weakness of the American currency in the overseas market.
Rupee is trading in a narrow range as market participants are vigilant ahead of the RBI's monetary policy later this week. RBI is expected to leave the repo rate unchanged at 6.5 per cent.
At the interbank foreign exchange, the domestic unit opened at 82.56 against the dollar, registering a gain of 7 paise over its previous close.
On Monday, the rupee closed at 82.63 against the US currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.04 per cent to 103.96.
Brent crude futures, the global oil benchmark, declined 0.20 per cent to USD 76.56 per barrel.
"The USDINR pair has entered a consolidation phase and is likely to move within the 82.20-82.85 range for a couple of sessions," CR Forex Advisors MD Amit Pabari said.
Pabari added that flows on one side and weakening pressure from the peer currencies is likely to keep the pair tugged in a range.
In the domestic equity market, the 30-share BSE Sensex rose 51.08 points or 0.08 per cent to 62,838.55. The broader NSE Nifty was up 18.15 points or 0.1 per cent to 18,612.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday as they offloaded shares worth Rs 700.98 crore, according to exchange data.
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