The rupee appreciated 4 paise to 82.66 against the US 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, forextraders 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.
On Tuesday, the rupee rose 6 paise to close at 82.70 against the US dollar. In early deals, it was moving in a close range of 82.66-82.67.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.10 per cent to 103.33.
Brent crude futures, the global oil benchmark, advanced 0.18 per cent to USD 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, according to SBI experts, the RBI will hold off on raising interest rates.
The 30-share BSE Sensex, meanwhile, was up 220.75 points, or 0.37 percent, to 60,506.79 points. To 17,792.85 points, the NSE Nifty index as a whole increased by 71.35 points, or 0.40 percent.
According to exchange data, Foreign Institutional Investors (FIIs) sold shares worth Rs 2,559.96 crore on Tuesday, making them net sellers in the capital market.
With inputs from Agencies.
(To receive our E-paper on WhatsApp daily, please click here. To receive it on Telegram, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)