The rupee could not hold on to the gains and was trading at 71.32 against the dollar at 0955 hrs.
Mumbai: The Indian rupee appreciated by 5 paise to 71.30 against the US dollar in early trade on Monday as higher opening in domestic equities and sustained foreign fund inflows strengthened investor sentiments.
At the interbank foreign exchange the rupee opened at 71.36, then gained ground and touched 71.30, registering a rise of 5 paise over its previous close.
On Friday, rupee had settled for the day at 71.35 against the US dollar.
The domestic unit however could not hold on to the gains and was trading at 71.32 against the dollar at 0955 hrs.
Forex traders said positive opening in domestic equities also supported the local unit.
Domestic bourses opened on a positive note on Monday with benchmark indices Sensex trading 109.90 points higher at 41,685.04 and Nifty up by 36.65 points at 12,282.45.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.10 per cent to 96.82.
Foreign institutional investors (FIIs) remained net buyers in the capital market, as they purchased shares worth Rs 81.37 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.25 per cent to trade at USD 68.33 per barrel.
The 10-year government bond yield was at 6.51 per cent in morning trade.
Meanwhile, on the global front, the US has carried out air strikes against a pro-Iran militant group in Iraq, killing 15 fighters, two days after a rocket attack that killed an American civilian contractor.