The Indian rupee appreciated by 21 paise to 85.87 against the US dollar in early trade on Thursday, supported by a weaker dollar in global markets.
However, rising global crude oil prices and continued foreign institutional investor (FII) outflows limited the extent of the rupee's gains, according to forex traders.
The dollar index, which measures the greenback’s strength against a basket of six major currencies, declined 0.27% to 97.41, after firming up in the previous session.