The rupee appreciated by 9 paise to 71.05 against the US dollar in early trade on Monday, tracking gains in domestic equities and indication of a revival in trade talks between the US and China.
Forex traders said positive opening in domestic equity market and Donald Trump's chief economic advisor comments that the US and China are seeking to revive trade talks supported the rupee.
If teleconferences between both sides' deputies pan out in the next 10 days "and we can have a substantive renewal of negotiations," Larry Kudlow said on Fox News Sunday. He further added that "then we are planning to have China come to the USA and meet with our principals to continue the negotiations."
At the interbank foreign exchange, the rupee opened at 71.12, then gained momentum and touched a high of 71.05, registering a rise of 9 paise over its previous close.
The domestic unit pared some gains and was trading at 71.07 against the dollar at 0959 hrs.
On Friday, the rupee had settled at 71.14 against the US dollar.
Meanwhile, foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,339.27 crore on Friday, according to provisional exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 98.20.
Brent crude futures, the global oil benchmark, rose 1.09 per cent to trade at USD 59.28 per barrel.
Domestic bourses opened on a bullish note on Monday with benchmark indices Sensex trading 211.91 points higher at 37,562.24 and Nifty up 40.05 points at 11,087.85.
The 10-year government bond yield was at 6.59 per cent in morning trade.