The rupee appreciated by 13 paise to close at 82.70 (provisional) against the U.S. currency on Thursday, supported by broad dollar weakness and a positive trend in domestic equities.
Forex traders said upbeat domestic trade deficit data and foreign fund inflows supported investor sentiments.
At the interbank foreign exchange market, the local unit opened at 82.72 against the American currency and finally settled at 82.70 (provisional) against the greenback, registering a gain of 13 paise over its previous close of 82.83.
During the trading session, the rupee touched a high of 82.59 and a low of 82.73 against the dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.21% to 103.70.
Global oil benchmark Brent crude futures declined 0.50% to $84.95 per barrel.
According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors LLP, rupee consolidated in a narrow range as dollar index and oil remained broadly unchanged.
"Rupee looks to be boxed in a range of 82.40 to 83.00 as RBI sits on one end at 82.90 and importers are at the other end. The US PPI data will be released today evening, which may give a direction to the currencies which are moving in a small range," Mr. Bhansali said.
On the domestic equity market front, the 30-share BSE Sensex advanced 44.42 points or 0.07% to end at 61,319.51, while the broader NSE Nifty rose 20.00 points or 0.11% to 18,035.85.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Wednesday as they purchased shares worth ₹432.15 crore, according to exchange data.
India's trade deficit in January narrowed to a 12-month low of $17.75 billion as imports declined 3.63% year-on-year to $50.66 billion. Exports in January dipped 6.58% to $32.91 billion, as against $35.23 billion a year ago.