The rupee gained 18 paise to 81.93 against the US dollar in early trade on Thursday tracking the broad weakness of the American currency in the overseas market.
Forex traders said foreign fund inflows also supported the local unit.
At the interbank foreign exchange, the domestic unit opened at 81.99 against the dollar, then climbed to 81.93, registering a rise of 18 paise over its previous close.
On Wednesday, the rupee closed at 82.11 against the US currency.
"Overall USDINR has strong support around 81.75-80 levels, as the RBI is intervening to protect from steep appreciation. Adding to it, the ongoing geopolitical concerns and Fed's hiking process are likely to weigh on investor sentiment and the USDINR could bounce back to 82.50-82.80 levels," CR Forex Advisors MD-Amit Pabari said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.06 per cent to 101.55.
Oil prices
On Thursday oil prices eased due to concerns over US recession and weaker oil demand. Brent crude on saw a fall of 19 cents at $87.14 a barrel where as US West Texas Intermediate dropped 16 cents to $83.10.
"Brent has risen to USD 87.25 per barrel as weak US CPI could mean that the Fed could sound less hawkish," IFA Global Research Academy said in a research note.
Stock market
The markets on Thursday opened in red with Sensex at 60,301.41, down by 91.36 points and Nifty fell by 26.75 points at 17,785.65. Mahindra and Mahindra, Power Grid, Titatn, Axis Bank and Maruti were the top gainers whereas Tata Motors, ICICI Bank, Kotak Bank, Bharti Airtel, Wipro were the top losers.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Wednesday as they purchased shares worth Rs 1,907.95 crore, according to exchange data.
CPI Inflation
India's retail inflation went down below the Reserve Bank of India's 6 per cent upper-bound in March, revealed the Ministry of Statistics and Programme Implementation. The Consumer Price Index inflation fell down from 6.44 per cent to 5.66 in March.
IIP growth
According to Ministry of Statistics and Programme Implementation data, India's industrial output went up by 5.6 per cent in February. This is in line with the expectation of 5.8 per cent.
With inputs from PTI
