The rupee appreciated by 12 paise to 81.75 against the US dollar in early trade on Wednesday, May 3, 2023 tracking weakness in the American currency overseas.
Forex traders said significant foreign fund inflows and crude oil prices below $80 a barrel supported the local unit even further.
At the interbank foreign exchange, the domestic unit opened at 81.80 against the dollar and then recovered to 81.75, registering a gain of 12 paise from its previous close.
On Tuesday, the rupee had closed at 81.87 against the American currency.
Meanwhile, the dollar index, which measures the strength of the dollar against six currencies, fell 0.24 per cent to 101.71.
Global oil benchmark Brent crude futures rose 0.04 per cent to $75.35 a barrel.
In the domestic equity market, the 30-share BSE Sensex closed 293.34 points or 0.48 per cent lower at 61,061.37. The broader NSE Nifty fell 86.95 points, or 0.48 per cent, to 18,060.70.
Foreign institutional investors (FIIs) were net buyers in the capital market on Tuesday as they bought shares worth Rs 1,997.35 crore, according to exchange data.
Forex traders said investors were awaiting cues from the US Federal Reserve’s rate decision.
“On the global front, US stocks declined as traders feared spiraling effects in the regional banking sector ahead of the Federal Reserve’s rate decision.
“Monetary policy began on Tuesday, and is likely to announce a widely expected 25 bps rate hike on Wednesday. It will be interesting to see whether the Fed is interested in extending the rate hike process beyond May,” CR said Amit Pabari, MD, Forex Advisors.