The rupee appreciated by 4 paise to 83.21 against the US dollar in early trade on Friday on positive cues from the equity market ahead of the RBI's interest rate decision.

Selling pressure from foreign equity investors amid strengthening dollar resulted in a negative bias, according to forex traders.

At the interbank foreign exchange, the domestic unit opened at 83.21 against the dollar and then reached the 83.22 level, before touching 83.21 again. This was a gain of 4 paise against the closing level of 83.25 on Thursday.

The six-member monetary policy committee of the Reserve Bank of India will announce its decision on key interest rates on Friday. Traders are also awaiting US weekly unemployment data later in the day.

"Rupee traded in a narrow range and volatility remained low ahead of the important RBI policy statement that will be released today.

"Expectation is that the central bank could keep rates on hold and maintain a hawkish stance," Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services, said.

"From the US, the focus will be on the non-farm payrolls numbers... we expect the USD-INR (spot) to trade sideways and quote in the range of 83.05 and 83.40," he added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.08 per cent higher at 106.42.

Brent crude futures, the global oil benchmark, was 0.32 per cent up at USD 84.34 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 174.41 points or 0.27 per cent higher at 65,805.98 points. The broader NSE Nifty advanced 57.65 points or 0.29 per cent to 19,603.40 points.

Foreign institutional investors remained net sellers in the capital market on Thursday, offloading shares worth Rs 1,864.20 crore, as per stock exchange data.

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