The rupee appreciated 2 paise to 83.34 against the US dollar in early trade on Friday, tracking a positive trend in domestic equities ahead of the Reserve Bank of India's monetary policy decision.
At the interbank foreign exchange, the rupee opened 2 paise higher at 83.34 against the dollar amid a firm trend in domestic equities.
On Thursday, the rupee settled at 83.36 against the US dollar.
Forex traders said investors are awaiting cues from the Reserve Bank of India's monetary policy decision.
The Reserve Bank is likely to maintain the status quo on the short-term interest rate in its monetary policy review.
RBI Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) began its three-day deliberations on December 6. Das will unveil the decision of the six-member MPC later on the day.
"Indian rupee is expected to be in a small range of 83.30/40 for the entire day as inflows are matched by the outflows mainly from oil companies," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.05 per cent higher at 103.59.
Brent crude futures, the global oil benchmark, advanced 1.70 per cent to USD 75.31 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 229.39 points or 0.33 per cent higher at 69,751.08 points. The broader NSE Nifty jumped 70.25 points or 0.34 per cent to 20,971.40 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 1,564.03 crore, according to exchange data.
