As a result of a weak dollar in the foreign exchange market, the rupee strengthened 8 paise to 81.25 versus the US dollar in early trade on Monday.
Weak domestic stocks, according to forex dealers, impacted the local currency and limited the appreciation bias.
The native currency rose 8 paise from its previous close to reaching 81.25 at the interbank foreign exchange from its opening price of 81.26 versus the dollar.
The rupee had depreciated by 7 paise to 81.33 versus the dollar on Friday.
The dollar index, which measures the strength of the dollar against a basket of six different currencies, decreased by 0.37 percent to 104.15.
The benchmark for world oil, Brent crude futures, is up 1.05 percent to USD 86.47 a barrel.
The 30-share BSE Sensex was down 139.99 points, or 0.22 percent, at 62,728.51 on the domestic equities market. The larger NSE Nifty decreased by 22.60 points, or 0.12%, to 18,673.50.
According to exchange statistics, Foreign Institutional Investors (FIIs) were net purchasers on Friday in the capital markets, buying shares worth Rs 214.76 crore.
Forex dealers predicted that investors will closely monitor the Reserve Bank of India’s monetary policy meeting on Wednesday for more indications.
According to analysts, the Reserve Bank may decide to reduce the rate hike for loans by 25 to 35 basis points since retail inflation shows indications of moderating and there is a need to boost growth.
At the conclusion of a three-day meeting of the Monetary Policy Committee (MPC) starting on Monday, the RBI will release its upcoming bimonthly policy review on December 7.
