The Indian rupee opened on a flat note and inched 4 paise higher to 74.30 against the US dollar in early trade on Tuesday amid cautious trade. Forex traders said price action remains subdued as investors are awaiting the Reserve Bank of India's (RBI) policy decision and the US non-farm payrolls data on Friday for further cues.

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At the interbank foreign exchange, the domestic unit opened at 74.36 against the dollar, then inched higher to 74.30, registering a gain of 4 paise over its previous close. On Monday, the rupee had settled at 74.34 against the US dollar.

"Rising COVID-19 infections in Asian countries could continue to keep appreciation limited," Reliance Securities said in a research note. Asian currencies have started mixed this Tuesday morning, while crude remains subdued and could cap depreciation bias, the note added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 percent down at 92.02. "USD-INR is being bought by RBI and therefore the stability is seen with a 10-15 paise movement. All other market participants are sellers. The market seems to be keenly awaiting for the MPC meeting starting tomorrow," said Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors.

On the domestic equity market front, BSE Sensex was trading 294.94 points or 0.56 percent higher at 53,245.57, while the broader NSE Nifty advanced 70.65 points or 0.44 percent to 15,955.80. Meanwhile, foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,539.88 crore, as per exchange data.

Global oil benchmark Brent crude futures declined 0.04 percent to USD 72.86 per barrel.