The rupee appreciated 2 paise to 83.03 against the US dollar in early trade on Wednesday supported by positive domestic equities.
Moreover, the weakness of the American currency in the overseas market also aided sentiments.
At the interbank foreign exchange, the rupee opened at 83.03 against the dollar, registering a gain of 2 paise over its previous close.
On Tuesday, the rupee declined marginally by 2 paise to close at 83.05 against the US dollar.
Forex traders said the rupee is trading in a narrow range as factors such as capital inflows and stable domestic economic data supported sentiments, while hawkish FED, strong US data and global tensions weighed on the local unit.
Moreover, investors were cautious as the Reserve Bank's monetary policy committee (MPC), the six-member rate-setting panel, began the deliberation on Tuesday. The central bank will announce the key interest rate decision on Thursday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.11 per cent lower at 104.09.
Brent crude futures, the global oil benchmark, rose 0.17 per cent to $78.72 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 336.54 points or 0.47 per cent higher at 72,522.63 points. The broader NSE Nifty advanced 116.05 points or 0.53 per cent to 22,045.45 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth ₹92.52 crore, according to exchange data.