The rupee recovered by 29 paise to 72.60 against the US currency in early trade Tuesday, owing to easing global crude oil prices and better-than-expected macro economic data on the domestic front.
Besides, fund inflows by foreign investors and the US dollar's weakness against some currencies overseas also supported the domestic unit, dealers said.
At the Interbank forex market, the rupee opened with strength at 72.81 and advanced to 72.60 against the dollar, showing a rise of 29 paise over its previous close of 72.89.
Retail inflation fell to a one-year low of 3.31 per cent in October on the back of cheaper kitchen staples, fruits and protein-rich items, official data released Monday showed.
Industrial production grew at the slowest pace in four months at 4.5 per cent in September mainly due to poor performance of mining sector and lower offtake of capital goods.
The industrial production measured in terms of Index of Industrial Production (IIP) was 4.1 per cent in September 2017.
Meanwhile, the international benchmark, Brent crude slipped below the USD 70-mark by falling 0.84 per cent, to USD 69.53 a barrel in Asian trade Tuesday.
Monday, the rupee dropped by 39 paise to settle at 72.89 against the US currency as oil prices rebounded after Saudi Arabia announced plans to cut production and the dollar strengthened in global markets.
Foreign institutional investors (FIis) bought shares worth Rs 832.15 crore Monday, provisional data showed.
The benchmark BSE Sensex fell by 56.31 points, or 0.16 per cent to 34,756.68 in early trade.