The rupee appreciated by 21 paise to 69.81 against the US dollar in opening trade Friday following the BJP's thumping victory in the Lok Sabha polls.
Strong FIIs inflows and higher domestic equity markets also buoyed sentiments for the rupee, forex dealers said.
However, rising crude prices and strengthening dollar restricted the gains of the domestic unit, they added.
The rupee opened on a strong note at 69.75 against the greenback at the interbank forex market. However, it surrendered initial gains to trade at 69.81 in early trade.
The rupee had settled 36 paise down at 70.02 against the US dollar in the previous session.
Prime Minister Narendra Modi on Thursday led his Bharatiya Janata Party to resounding victory for a second term in the office.
Foreign institutional investors (FIIs) were net buyers in the capital markets, buying shares worth 1,352.20 crore on Thursday, according to exchange data.
The BSE Sensex was trading 170.51 points, or 0.44 per cent, higher at 38,981.90. Similarly, the broader NSE Nifty spurted 54.15 points, or 0.46 per cent, to 11,711.20.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.02 per cent to 97.88.
Brent crude futures, the global oil benchmark, grew by 1.12 per cent to trade at USD 68.52 per barrel.
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