The rupee traded in a narrow range and appreciated by 1 paise to 82.62 against the US dollar in early trade on Thursday amid a positive trend in the domestic equity market.
Outflow of foreign funds and relatively higher crude prices weighed on the domestic unit, according to forex traders.
Investors are also awaiting the GDP data for the first quarter of the current fiscal that will be released later in the day.
At the interbank foreign exchange, the domestic unit opened at 82.65 and traded between the peak of 82.58 and the lowest level of 82.73 against the greenback.
Later, the rupee was trading at 82.62 against the dollar, registering a gain of 1 paise from its previous close.
On Wednesday, the rupee closed at 82.63 against the dollar.
The latest US data indicated that the pace of employment growth was less than expected in August, raising hopes for easing of interest rates by the Federal Reserve.
Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services, said the dollar extended losses "on back of a disappointing US preliminary GDP number".
"On the domestic front, GDP number will be released today; expectation is that in Q1 growth has accelerated by 7.7 per cent, driven by the services sector and greater capital expenditure.
"If the number beat estimates, we are likely to see the rupee gain strength against the US dollar. We expect the USD-INR (Spot) to trade sideways and quote in the range of 82.40 and 82.80," Somaiya added.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 103.14.
Brent crude futures, the global oil benchmark, was trading 0.03 per cent lower at USD 85.83 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 113.86 points of 0.17 per cent higher at 65,201.11 points. The broader NSE Nifty inched up 18 points or 0.09 per cent to 19,365.45 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Wednesday as they offloaded shares worth Rs 494.68 crore, according to exchange data.
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