The rupee inched up 1 paisa to close at 83.32 (provisional) against the US dollar on Thursday as the support from positive domestic equities was negated by continued selling pressure from foreign funds.

Forex traders said foreign capital outflows also weighed on the rupee. However, a soft US dollar against key rivals overseas supported the domestic currency.

At the interbank foreign exchange market, the local unit opened at 83.34 against the greenback. Moving in a tight range, the unit hit an intra-day high of 83.31 and a low of 83.40 against the greenback.

The local currency finally settled at 83.32 (provisional) against the dollar, 1 paisa higher from its previous close.

On Wednesday, the rupee consolidated in a narrow range and settled 2 paise lower at 83.33 against the US dollar.

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"We expect the rupee to trade with a slightly negative bias on recovery in crude oil prices and mixed to weak Asian and European markets. However, a soft dollar amid easing geopolitical tensions in the Middle East may support the rupee at lower levels," said Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas.

Choudhary further noted that traders may take cues from Advance GDP, weekly unemployment claims and pending home sales data from the US. Investors may remain cautious ahead of inflation data on Friday. USD/INR spot price is expected to trade in a range of ₹83.10 to ₹83.70.

Brent crude futures, the global oil benchmark, rose 0.05 per cent to $88.06 per barrel.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 105.60, fell by 0.24 per cent.

On the domestic equity market front, Sensex advanced 486.50 points, or 0.66 per cent, to settle at 74,339.44, and Nifty rose 167.95 points, or 0.75 per cent, to close at 22,570.35.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth ₹2,511.74 crore, according to exchange data.