The rupee started on a choppy note on Monday as investors turned cautious tracking heavy selling in domestic equities and worries over a new variant of COVID-19.
At the interbank foreign exchange, the rupee opened higher by 5 paise at 74.84 against the greenback and later touched a high of 74.82.
However, the local unit pared gains in late morning deals amid high volatility. The rupee was trading down by 9 paise at 74.98 at 1035hrs.
On Friday, the rupee had plunged by 37 paise or 0.50 per cent against the US dollar to close at a nearly month's low of 74.89, as investors resorted to risk-off sentiment.
Investor concern resurfaced about lockdowns amid a rise in COVID cases in Europe and a new variant, detected in South Africa.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.19 per cent to 96.27.
Meanwhile, global oil benchmark Brent crude futures advanced 4.06 per cent to USD 75.67 per barrel.
Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth Rs 5,785.83 crore, as per exchange data.
On the domestic equity market front, the 30-share Sensex was trading 98.48 points or 0.17 per cent lower at 57,008.67, while the broader NSE Nifty declined 44.85 points or 0.26 per cent to 16,981.60.