The rupee recovered from its all-time low levels and appreciated by 9 paise to 82.99 against the U.S. dollar in early trade on August 16 as crude oil price retracted from its elevated levels.
However, a muted trend in domestic equities and the strength of the American currency in the overseas market dented investor sentiments, forex traders said.
At the interbank foreign exchange, the domestic unit opened at 83.10, then touched a high of 82.99 against the American currency, registering a rise of 9 paise over its last close.
On August 14, the rupee depreciated 26 paise to settle at an all-time low of 83.08 against the U.S. dollar.
Forex market was closed on August 15 and August 16 on account of Independence Day and Parsi New Year, respectively.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.12% to 103.55.
"The dollar index rose above 103 levels following safe haven buying on the back of rising uncertainty and after hawkish FOMC meeting minutes that showed officials were keen on raising rates further as inflation persists.
"Today, the focus will be on the Philadelphia Fed manufacturing index number from the U.S. We expect the USDINR(Spot) to trade sideways and quote in the range of 83.05 and 83.50," said Gaurang Somaiya, forex and bullion analyst, Motilal Oswal Financial Services.
Brent crude futures, the global oil benchmark, rose 0.12% to $83.55 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 120.71 points or 0.18% lower at 65,418.71. The broader NSE Nifty declined 43.55 points or 0.22% to 19,421.45.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on August 16 as they purchased shares worth ₹722.76 crore, according to exchange data.
