The rupee appreciated 2 paise to 83.35 against the US dollar in early trade on Wednesday, amid a bullish trend in domestic equities and sustained foreign fund inflows.
Forex traders said investors remained on the sidelines ahead of the Reserve Bank of India's monetary policy decision later this week.
At the interbank foreign exchange, the rupee opened 2 paise higher at 83.35 against the dollar as domestic benchmark indices touched new lifetime peaks.
On Tuesday, the rupee settled at 83.37 against the dollar.
“The RBI’s policy, commencing on Tuesday with a decision due on Friday, will be closely monitored,” CR Forex Advisors MD Amit Pabari said.
The Reserve Bank is likely to maintain the status quo on the short-term interest rate in its monetary policy review.
RBI Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) is scheduled to begin its three-day deliberations on December 6. Das would unveil the decision of the six-member MPC on December 8.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.11 per cent lower at 103.93.
Brent crude futures, the global oil benchmark, advanced 0.12 per cent to USD 77.29 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 269.23 points or 0.39 per cent higher at 69,565.25 points. The broader NSE Nifty jumped 79.50 points or 0.38 per cent to 20,934.60 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth Rs 5,223.51 crore, according to exchange data.
