The rupee appreciated 5 paise to 83.54 against the US dollar in early trade on Wednesday, boosted by positive sentiments in the domestic equity market.
Forex traders said rupee is trading in a narrow range as all eyes are on the US May CPI print and the Fed rate decision on the global front and India's Consumer Price Index (CPI) on the domestic front.
Moreover, the strength of the American currency in the overseas market and elevated crude oil prices weighed on the local unit and restricted the upmove.
At the interbank foreign exchange market, the local unit opened at 83.56 and gained further to trade at 83.54 against the greenback in initial deals, registering an increase of 5 paise from its previous closing level.
On Tuesday, the rupee settled for the day lower by 9 paise at 83.59 against the US dollar.
"The Indian rupee has remained steady despite a strengthening US Dollar driven by rising US bond yields and diminished expectations of Fed rate cuts following robust US employment figures," CR Forex Advisors MD Amit Pabari said.
Pabari further said that falling fiscal deficits, stronger growth and reduced political uncertainties, with Narendra Modi's coalition government taking charge, have provided some support for the rupee.
"The Reserve Bank of India, armed with substantial reserves of USD 651 billion, stands ready to intervene to prevent significant rupee depreciation," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent higher at 105.25.
Brent crude futures, the global oil benchmark, rose 0.41 per cent to USD 82.26 per barrel.
On the domestic equity market, the 30-share BSE Sensex was trading 269.20 points, or 0.35 per cent higher at 76,725.79 points. The broader NSE Nifty advanced 92.60 points or 0.4 per cent to 23,357.45 points in initial trade.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, selling shares worth Rs 111.04 crore, according to exchange data.
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