In the early session on Monday, the rupee rose 2 paise to 83.72 versus the US dollar, aided by a weak dollar in international markets. At the interbank foreign currency market, the rupee opened at 83.70 versus the US dollar. During early trading, the local currency fluctuated between 83.70 and 83.72.

The rupee was trading at 83.72 versus the US dollar at 9.30 a.m. Foreign money withdrawals from Indian stocks following the government's decision to raise capital gains taxes weighed on the local rupee and limited the upward movement, FX dealers said.

On Friday, the local currency regained 5 paise from it's all-time low to close at 83.73 versus the US dollar, buoyed by domestic market resilience and anticipation of additional foreign inflows.

In early trade on Monday, the 30-share BSE Sensex rose 355.7 points, or 0.44 percent, to 81,688.42, setting a new record.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was at 104.23, down 0.08 percent.

Brent crude futures, the global oil benchmark, climbed 0.24, or 0.3%, to $81.37 per barrel.

India's foreign reserves increased by $4 billion to an all-time high of $ 670.857 billion for the week ended July 19, according to Reserve Bank statistics issued on Friday.

Foreign institutional investors (FIIs) were net purchasers in the capital markets on Friday, buying shares worth Rs 2,546.38 crore, according to exchange data.