Sustained foreign fund outflows and sell-offs in domestic equities put pressure on the forex market, somewhat capping the rupee gains.
At the interbank foreign exchange the rupee opened at 70.75, registering a rise of 12 paise over its previous close.
Forex traders said globally risk appetite has plunged as US-China trade concerns continue to linger.
Rupee closed higher by 0.44 per cent at 70.56 to the US dollar, a level not seen since August 2 when it had ended at 69.60.
Rupee was trading up by 10 paise at 70.78 at 1325 hrs against the dollar which otherwise was ruling high in overseas markets.
Robust buying in domestic equities, fresh foreign fund inflows and easing crude prices also lent support to rupee, forex traders said.
At the interbank foreign exchange, the domestic unit opened weak and shuttled between a high of 70.87 and a low of 71.03 during the day.
Forex traders said investors turned cautious after the US Federal Reserve dimmed hopes of further rate cuts.
However, unabated foreign fund outflows capped the gains, forex traders said.
Elevated crude oil prices have emerged as major fears for India in form of fiscal slippage and inflationary pressure.