Rising for the second straight session, the rupee Tuesday inched up 6 paise to 69.80 against the US dollar on fresh foreign funds inflows amid exit poll predictions of a clear majority for the NDA.
Besides, a positive start of the equity markets also supported the rupee, forex dealers said.
However, a strong US dollar against major global currencies and rising crude prices capped gains of the domestic unit, they added.
At the Interbank Foreign Exchange market, the domestic unit opened slightly up at 69.75 against the dollar then rose further to quote at 69.80, up 6 paise over its previous close.
The rupee had appreciated 49 paise to 69.74 against the US dollar in the previous session.
Most exit polls forecast another term for Prime Minister Narendra Modi. The results of the seven-phase polls will come out Thursday.
The BSE Sensex was trading 205.24 points, or 0.52 per cent, higher at 39,557.91 in early trade. In similar movement, the broader NSE Nifty rose 48.90 points, or 0.41 per cent, to 11,877.15.
Foreign institutional investors (FIIs) emerged as net buyers in the capital markets, putting in Rs 1,734.45 crore on Monday, provisional exchange data showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.04 per cent to 97.97.
Meanwhile, brent crude, the global benchmark, surged 0.31 per cent to trade at at 72.19 per barrel.
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