The Indian rupee eked out a marginal 4 paise gain at 75.05 against the U.S. dollar in morning trade on January 28, tracking positive opening in domestic equity markets.
However, strong American currency and elevated crude oil price level restricted the rupee's further recovery.
Forex traders said geopolitical tensions, sustained foreign fund outflows and hawkish U.S. Fed stance dragged down the local unit, while positive domestic equities supported the local unit in opening deals.
At the interbank foreign exchange, the rupee opened at 75.12 against the U.S. dollar and slipped further to 75.13, before staging a mild recovery to trade at 75.05, clocking a gain of 4 paise.
On January 27, the rupee had settled at 75.09 against the U.S. dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.08% to 97.17.
Weak Asian and emerging market peers, along with strong crude oil prices will weigh on sentiments. However, exporters may look to hedge their exposures and IPO flows may trickle in capping the depreciation bias of the domestic unit, said Sriram Iyer, Senior Research Analyst at Reliance Securities.
The Reserve Bank of India's presence also could not be ruled out to curb volatility in the market, Mr. Iyer added.
Meanwhile, global oil benchmark Brent crude futures jumped by 0.50% to $89.79 per barrel.
On the domestic equity market front, the 30-share Sensex was trading more than 691.43 points or 1.21% higher at 57,968.37, while the broader NSE Nifty advanced by 235.65 points or 1.38% to 17,345.80.
Foreign institutional investors remained net sellers in the capital market on January 27, as they offloaded shares worth ₹6,266.75 crore, as per stock exchange data.