Rupee is trading at 71.07 against US dollar in early trade as gains in domestic equity market enthused investors.
Forex traders said investors turned cautious after the US Federal Reserve dimmed hopes of further rate cuts.
A weak opening in domestic equities and unabated foreign fund outflows also weighed on the domestic currency.
However, unabated foreign fund outflows capped the gains, forex traders said.
Rupee is trading at 71.43 against dollar as gains in domestic equity market and easing crude prices strengthened investor sentiments.
Elevated crude oil prices have emerged as major fears for India in form of fiscal slippage and inflationary pressure.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.01 per cent to 98.61.
Weak opening in domestic equities and sustained foreign fund outflows also weighed on the domestic currency.
At the interbank foreign exchange the rupee opened at 70.94, then gained further ground and touched a high of 70.88.
Easing crude oil prices and fresh foreign capital inflows provided further support, forex traders said.