The rupee appreciated 18 paise to 74.73 against the US dollar in opening trade on Tuesday tracking positive domestic equities and hopes of COVID-19 vaccine.
At the interbank forex market, the domestic unit opened at 74.79 against US dollar, then gained further ground and and touched 74.73 against the US dollar, up 18 paise over its previous close.
It had settled at 74.91 against the US dollar on Monday.
Forex traders said positive opening in domestic equities, foreign fund inflows and hopes of COVID-19 vaccine supported the rupee.
A coronavirus vaccine created by the University of Oxford appears safe and induces a strong immune response within the body, scientists announced on Monday after the first phase of human trials.
In India, AIIMS-Delhi on Monday began recruiting volunteers for conducting human clinical trials of the indigenously developed COVID-19 vaccine candidate Covaxin.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.04 per cent to 95.87.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 387.14 points higher at 37,806.13 and broader NSE Nifty rose 110.25 points to 11,132.45.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,709.97 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 0.14 per cent to USD 43.34 per barrel.
Meanwhile, the number of cases around the world linked to COVID-19 has crossed 1.47 crore and the death toll has topped 6.09 lakh.
In India, the death toll due the disease rose to 28,084 and the number of infections has touched 11,55,191, according to the health ministry.