The rupee appreciated by 2 paise to 82.61 against the US dollar in early trade on Tuesday amid a weak American currency against major rivals overseas and positive domestic equity markets.

Retreating crude oil prices also supported the Indian currency even as outflow of foreign funds capped a sharp gain, forex traders said.

At the interbank foreign exchange, the domestic unit opened at 82.58, then touched the lowest level of 82.62. It later traded at 82.61 against the greenback, registering a gain of 2 paise over its previous close.

On Monday, the rupee settled 1 paisa higher at 82.63 against the US dollar.

The Indian currency was trading in the narrow range as market participants are awaiting the US jobs data to be released on Friday. Also, a close watch on the Chinese currency's response to the country's slowing factory output and other macroeconomic indicators weighed on the rupee, forex analyst said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent lower at 103.85.

Brent crude futures, the global oil benchmark, fell 0.05 per cent to USD 84.38 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 182.08 points or 0.28 per cent higher at 65,178.68. The broader NSE Nifty advanced 53.65 points or 0.28 per cent to 19,359.70.

Foreign Institutional Investors (FIIs) were net sellers in capital markets on Monday as they offloaded shares worth Rs 1,393.25 crore, according to exchange data.

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