The rupee witnessed range-bound trade and appreciated 3 paise to 83.99 against the US dollar in initial deals on Thursday, as suspected RBI intervention, coupled with softer oil prices supported the rupee at lower levels.

Forex traders said the rupee is likely to trade in a narrow range during the day as strong dollar and a muted tone in the domestic equities weighed on the local unit, while weak crude oil prices and any intervention by the Reserve Bank of India (RBI) may also support the local currency.

At the interbank foreign exchange, the rupee opened at 84.01 against the greenback. In the initial trade, it touched 83.99, registering a rise of 3 paise over its previous close.

On Wednesday, the rupee witnessed a range-bound trade and strengthened marginally by 2 paise to 84.02 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 103.59.

Brent crude, the global oil benchmark, rose marginally by 0.26 per cent to USD 74.41 per barrel in futures trade.

"India's trade deficit shrank significantly in September, falling to $20.78 billion from a ten-month high of $29.65 billion in August. A narrowing trade gap eases some of the pressure on the rupee, providing it with a temporary cushion," CR Forex Advisors MD Amit Pabari said.

Adding to the optimism, oil prices have recently dipped by 5 per cent, driven by weaker global demand and easing tensions in the Middle East, Pabari added.

Additionally, all eyes will be on the ECB monetary policy meeting and key US economic data points, which may further influence the rupee’s trajectory, he added.

On the domestic equity market front, Sensex declined 281.66 points, or 0.35 per cent, to 81,219.70 points. The Nifty fell 129.35 points, or 0.52 per cent, to 24,841.95 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday, as they offloaded shares worth Rs 3,435.94 crore, according to exchange data.

On the macroeconomic front, the country's merchandise exports rose marginally by 0.5 per cent to USD 34.58 billion in September while the trade deficit narrowed to a five-month low at USD 20.78 billion.

According to official data released on Wednesday, imports increased by 1.6 per cent to USD 55.36 billion in September compared to USD 54.49 billion in the year-ago period.

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