The rupee appreciated 14 paise to 73.25 against the American currency in early trade on Monday tracking weak US dollar and sustained foreign fund inflows into the domestic equity market. Forex traders said heavy buying in domestic equities, and strong Asian currencies also aided the positive trend in the local unit.

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At the interbank forex market, the domestic unit opened at 73.26 against the US dollar, then gained further ground and touched 73.25 against the greenback, registering a rise of 14 paise over its previous close.

The rupee had surged 43 paise to close at 73.39 to the US dollar on Friday, its best closing level in nearly six months.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.09 per cent to 92.29.

"The US dollar continues to get pummeled. The comments by US Fed chair Jerome Powell in Jackson Hole about Fed adopting average inflation targeting implies inflation expectations can rise without overnight rates rising. This has resulted in the US yield curve steepening. US real rates are lower and that is weighing on the US dollar," said Abhishek Goenka, Founder and CEO, IFA Global.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 325.89 points higher at 39,793.20 and broader NSE Nifty advanced 97.05 points to 11,744.65.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,004.11 crore on Friday, according to provisional exchange data.

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Brent crude futures, the global oil benchmark, rose 0.61 per cent to USD 46.09 per barrel.