The rupiah appreciated 4 paise to 79.80 against the US dollar at the opening of trade on Monday, supported by lower crude prices in global markets and the weakness of the US currency abroad.
However, losses in domestic stock markets weighed on the local unit and limited the gain, traders said.
On the interbank exchange, the national unit opened lower at 79.90 against the dollar but recovered the lost ground to quote 79.80, registering a gain of 4 paise compared to its previous close.
In the previous session, the rupee depreciated by 20 paise to close at 79.84 against the dollar.
The dollar index, which measures the strength of the greenback against a basket of six currencies, slipped 0.05% to 108.11.
Brent futures, the global oil benchmark, fell 1.14% to $95.62 a barrel.
In the stock market, the 30 stocks BSE Sensex was trading 351.18 points or 0.59% decline to 59,294.97. Similarly, the broader NSE Nifty fell 107.35 points or 0.60% to 17,651.10.
Foreign institutional investors (FIIs) remained net buyers in the capital markets as they bought shares worth Rs 1,110.90 crore on Friday, according to preliminary data.
After becoming net buyers last month, overseas investors have shown tremendous enthusiasm for Indian equities and have so far injected nearly Rs 44,500 crore in August.