The rupee rebounded from its all-time low levels and appreciated 12 paise to 83.49 against the US dollar in early trade on Thursday, supported by a firm trend in domestic equities and tracking gains in Asian currencies.
Forex traders said the local unit gained ground as the American currency retreated from its elevated levels.
At the interbank foreign exchange market, the local unit opened at 83.51 against the greenback. It later touched 83.49 in initial trade, registering a rise of 12 paise from its previous close.
On Tuesday, the rupee plunged 17 paise to hit its lowest level of 83.61 against the US dollar for the second time in four weeks.
Forex and money markets were closed on Wednesday on account of 'Ram Navami'.
The Indian rupee which closed at record lows on Tuesday opened around 83.51 this morning as Asian currencies gained a bit against the dollar, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
The rupee is likely to trade in the range of 83.45 to 83.65 as FPIs and oil companies buy dollars while RBI sells the American currency as it did on Tuesday when it might have intervened by USD 2 billion, Bhansali added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.88, lower by 0.07 per cent.
The dollar took a breather as traders assessed US interest rates outlook in the wake of comments from Federal Reserve officials that cemented expectations of monetary settings being restrictive for longer, Bhansali added.
Brent crude futures, the global oil benchmark, rose 0.33 per cent to USD 87.58 per barrel.
On the domestic equity market front, the 30-share BSE Sensex climbed 226.69 points or 0.31 per cent to 73,170.37 in early trade. The NSE Nifty advanced 89.05 points or 0.4 per cent to 22,236.95.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 4,468.09 crore, according to exchange data.
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