The rupee rose 10 paise to 71.14 against the US dollar in opening trade at the interbank forex market on Thursday on mild selling of the greenback by exporters and a higher opening in the domestic equity market.
Traders said unabated foreign fund inflows too supported the recovery in the Indian rupee.
Meanwhile, the dollar rose from a three-week low overseas as investors grew cautious about US-China trade talks.
The rupee fell 17 paise to close at 71.24 against the US dollar on Wednesday amid a flare up of tensions between India and Pakistan.
Meanwhile, foreign institutional investors (FIIs) remained net buyers in capital markets, putting in Rs 423.04 crore on a net basis Wednesday, as per provisional data.
The benchmark BSE Sensex recovered 132.56 points, or 0.37 per cent, to 36,037.99 in opening trade.