The rupee appreciated by 8 paise to 67.57 against the US dollar in early session on Thursday, after the American currency weakened overseas.
Dealers said fresh selling of the greenback by banks and exporters backed up the rupee.
The dollar turned weak against other currencies overseas even after the US Federal Reserve lifted interest rates and signalled two more hikes this year and four in 2019.
On Wednesday, the domestic unit ended 16 paise down to close at a near one-week low of 67.65 against the US currency on sustained dollar demand.
The benchmark BSE Sensex dropped by 126.09 points, or 0.35%, to 35,613.07 in early trade.