The rupee traded in a narrow range on Wednesday and appreciated 2 paise to 83.96 against the American currency, on easing crude oil prices and tracking its Asian peers.

Forex traders said foreign institutional inflows, alongside significant corrections in asset classes like the dollar index and crude oil prices, supported the rupee, while the Reserve Bank's active intervention kept the rupee in a tight range.

At the interbank foreign exchange market, the local unit moved in a narrow range. It opened at 83.97 against the American currency and was at 83.96 in initial trade, registering a rise of 2 paise over its previous close.

On Tuesday, the rupee depreciated 3 paise to close at 83.98 against the American currency.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.21 per cent to 101.42 points.

Brent crude, the international benchmark, was trading higher by 0.48 per cent to USD 69.52 per barrel in futures trade.

Forex traders said crude oil level of USD 69 per barrel will act as a support for the domestic unit as India, the world's third-largest oil importer, stands to benefit from cheaper oil.

"The Indian rupee cannot remain in such a state for long as fundamentals clearly indicated gains for rupee with a fall in oil prices, good economic fundamentals, rise in Asian currencies and rising interest differentials should allow RBI to allow the rise in rupee," Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Bhansali further said that over a longer term 83.97 looks to be a good selling level for exporters despite a higher Real Effective Exchange Rate (REER) which the Reserve Bank may have to ignore for the moment. For the day 83.90 to 84.05 should be the range.

On the domestic equity market, the 30-share BSE Sensex declined 104.25 points, or 0.13 per cent, to 81,817.04, while the Nifty was down 33.05 points, or 0.13 per cent, to 25,008.05.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 2,208.23 crore, according to exchange data.

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