The rupee strengthened by 5 paise to 81.97 against the US dollar in early trade on Wednesday on foreign fund inflows and gains in domestic equities.
The currency opened higher by 2 paise at 82 at the interbank foreign exchange market and moved in a tight range of 82.01 to 81.97 in early trade.
The rupee was trading at 81.97 against the US dollar at 9.35 am, registering a gain of 5 paise over the previous close of 82.02.
Foreign portfolio investments into equities and overnight losses in the US dollar in global markets boosted the rupee sentiment in early trade, analysts said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was almost flat at 102.58.
Global crude oil benchmark Brent crude was trading 0.69 per cent higher USD 72.76 per barrel.
In the domestic equity market, the 30-share BSE Sensex advanced by 199.06 points or 0.31 per cent to 63,615.09 points while the broader Nifty gained 62.75 points to 18,880.15 points.
Foreign Portfolio Investors emerged as net buyers in the capital market on Tuesday as they bought shares worth Rs 2,024.05 crore, according to exchange data.
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