The rupee appreciated 4 paise to 82.85 against the US dollar in early trade on Friday on the back of robust GDP data and massive inflow of foreign funds in the domestic capital markets.

A positive sentiment in the equity markets also supported the local currency, though the higher level of the dollar index came as a negative bias, forex traders said.

At the interbank foreign exchange, the local currency opened at 82.86 and gained slightly to 82.85 against the greenback, registering an increase of 4 paise from its previous close.

On Thursday, the rupee settled 2 paise higher at 82.89 against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, declined 0.08 per cent to 104.01.

Brent crude futures, the global oil benchmark, advanced 0.34 per cent to USD 82.19 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 414.5 points or 0.57 per cent higher at 72,914.80 points. The broader NSE Nifty soared 135.65 points or 0.62 per cent to 22,118.45 points.

The government data released on Thursday showed India's economic growth accelerated to 8.4 per cent in the October-December quarter of this fiscal, mainly due to double-digit growth in manufacturing and a good showing by mining & quarrying and construction sectors.

Another data showed the growth of eight key infrastructure sectors slowed to a 15-month low of 3.6 per cent in January on account of poor performance of sectors like refinery products, fertiliser, steel, and electricity.

The government's fiscal deficit at ₹11 lakh crore at January end touched 63.6 per cent of the revised annual target. In the corresponding period last year, the fiscal deficit or gap between the expenditure and revenue was 67.8 per cent of the Revised Estimates (RE) of the Union Budget 2022-23.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Thursday as they bought shares worth ₹3,568.11 crore on a net basis, according to exchange data.