The rupee appreciated by 2 paise to 83.23 against the US dollar in early trade on Wednesday on the back of a weaker American currency and inflow of foreign funds in the domestic equity markets.

Forex traders said surging crude oil prices and negative trend in equity markets, however, capped the rise in the domestic currency.

At the interbank foreign exchange, the domestic unit opened at 83.24 against the dollar and then inched up to 83.23, registering a gain of 2 paise over its previous close.

On Tuesday, the rupee settled at 83.25 against the US dollar.

Analysts expect the rupee to stay in a narrow range as traders may take cues from retail sales and industrial production data from the US. Data on the US crude weekly inventory, China's GDP, industrial production, UK and European region inflation are also awaited.

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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 106.18.

Brent crude futures, the global oil benchmark, witnessed a sharp rise of 2.10 per cent to $88.48 per barrel.

Stock market

In the domestic equity market, the 30-share BSE Sensex was trading 110.73 points or 0.17 per cent lower at 66,317.36. The broader NSE Nifty declined 24.75 points or 0.12 per cent to 19,786.75.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth Rs 263.68 crore, according to exchange data.