The rupee appreciated 4 paise to 82.66 against the U.S. dollar in early trade on Wednesday, supported by a firm trend in domestic equities ahead of the Reserve Bank of India's monetary policy decision.
However, investors remained concerned over rising crude prices in the overseas markets and persistent foreign capital outflows, forex traders said.
At the interbank foreign exchange, the domestic unit opened strong at 82.67 against the dollar, then inched higher to 82.66, a rise of 4 paise over its last close.
In early deals, it was moving in a close range of 82.66-82.67.
On Tuesday, the rupee rose 6 paise to close at 82.70 against the U.S. dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.10% to 103.33.
Brent crude futures, the global oil benchmark, advanced 0.18% to $83.84 per barrel.
The Reserve Bank of India's monetary policy decision on Wednesday will be closely watched by investors for further cues and there are expectations that the repo rate will be hiked by 25 basis points.
However, economists at SBI have said they expect the RBI to hit the pause button on interest rate hike.
Meanwhile, the 30-share BSE Sensex was trading 220.75 points or 0.37% higher at 60,506.79 points. The broader NSE Nifty advanced 71.35 points or 0.40% to 17,792.85 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital market on Tuesday as they offloaded shares worth ₹2,559.96 crore, according to exchange data.
