The rupee rose 6 paise to 83.94 against the US dollar in early trade on Tuesday supported by a weaker greenback and lower crude oil price.
However, volatility in the domestic equity markets and FII outflows capped sharp gains in the local unit, forex traders said.
At the interbank foreign exchange, the rupee opened at 83.97 against the US dollar and rose to 83.92 before slipping marginally to 83.94, higher by 6 paise from its previous close.
The domestic unit had settled at 84.00 on Monday.
The reconstituted rate-setting panel of the Reserve Bank of India (RBI) on Monday started deliberations on the next bi-monthly monetary policy.
The decision of the panel will be announced on Wednesday, which could determine the movement in the rupee over the next few days.
In the current context, experts feel that the RBI may not follow the US Federal Reserve, which lowered the benchmark rates by 50 basis points, and the central banks of some developed nations, which have reduced the interest
