The rupee gained 4 paise to 81.75 against the US dollar in early trade on Friday tracking a weak American currency and foreign fund inflows.
Forex traders said the rupee is trading in a narrow range as the support from crude oil prices below USD 80 a barrel was negated by muted domestic equities.
At the interbank foreign exchange, the domestic unit opened at 81.77 against the dollar and then rose to 81.75, registering a rise of 4 paise over its previous close.
On Thursday, the rupee closed at 81.79 against the US currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.01 per cent to 101.51.
Oil prices were steady on Friday but are expected to drop for the second time after disappointing economic data from the US and increasing fear of further interest rate hikes raising questions regarding the future fuel demand. Brent crude futures for June were up 16 cents at $78.53 per barrel and US West Texas Intermediate crude was at $74.99 with a gain of 23 cents.
Traders said, investors are awaiting cues from key domestic macroeconomic data release.
"The important data to be released are EuroZone GDP, BOJ monetary policy statement, India Fiscal deficit and FX reserves, US Michigan Consumer sentiment, US personal income and core PCE price index," said Anil Kumar Bhansali, Head of Treasury Finrex Treasury Advisors LLP.
The markets on Friday opened in green with Sensex at 60,739.60, up by 90.22 points and Nifty rose by 28.70 points at 17,943.75. Wipro, LT, TCS, Infosys and Reliance were the top gainers whereas UltraTech Cement, Power Grid, Tech Mahindra, ICICI Bank and Kotak Bank were the top losers.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Thursday as they purchased shares worth Rs 1,652.95 crore, according to exchange data.
With inputs from PTI
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