The Indian rupee started the New Year on a positive note and rose 7 paise to 71.29 against the US dollar in early trade on Wednesday as optimism over the US-China trade deal strengthened investor sentiments.
Forex traders said easing crude oil prices and higher opening in domestic equities also supported the domestic unit.
At the interbank foreign exchange, the rupee opened at 71.30 then gained further ground and touched 71.29 against the US dollar, showing a rise of 7 paise over its previous closing.
The Indian rupee on Tuesday had closed at 71.36 against the dollar.
Traders said the rupee gained support amid positive developments on the US-China trade deal front.
US President Donald Trump on Tuesday said that a partial new US-China trade agreement will be signed in the middle of next month, announcing that he will also then travel to China for continued talks.
"I will be signing our very large and comprehensive Phase One Trade Deal with China on January 15," Trump tweeted moments before Wall Street was due to open.
Meanwhile, brent crude futures, the global oil benchmark, fell 1 per cent to USD 66 per barrel.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they sold shares worth Rs 1,265.10 crore on Tuesday, as per provisional data.
Domestic bourses opened on a positive note on Wednesday with benchmark indices Sensex trading 86.91 points up at 41,340.65 and Nifty higher by 24.80 points at 12,193.25.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.70 per cent to 97.06.
The 10-year government bond yield was at 6.54 in morning trade.