The rupee appreciated five paise to close at 83.03 (provisional) against the US dollar on Wednesday, tracking positive domestic equities.

Forex traders said strength of the American currency in the overseas market and elevated crude oil prices weighed on the local unit and restricted a sharp uptick.

At the interbank foreign exchange, the local unit opened at 83.11 against the greenback. It hit an intra-day high of 83.02 and a low of 83.12.

It finally settled at 83.03 (provisional) against the dollar, higher by five paise from its previous close of 83.08.

"We expect the rupee to trade with a slight negative bias on strong US dollar and risk aversion in global markets. Rising crude oil prices may also put pressure on the rupee," said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas.

Choudhary added that any bounce back in domestic markets may support the rupee at lower levels.

"Traders may remain cautious ahead of India's trade balance and US retail sales data. USD-INR spot price is expected to trade in a range of ₹82.80 to 83.40," Choudhary said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent lower at 104.92.

"US Dollar bounced back on hotter-than-expected inflation. US CPI rose 3.1 per cent y-o-y in January 2024 vs forecast of 2.9 per cent. Core CPI rose 3.9 per cent y-o-y vs forecast of 3.7 per cent. This led to a decline in expectations of a rate cut by the Federal Reserve in March and May 2024," Choudhary said.

Brent crude futures, the global oil benchmark, rose 0.16 per cent to $82.90 per barrel.

On the domestic macroeconomic front, the wholesale price index (WPI)-based inflation eased to a three-month low of 0.27 per cent in January, mainly due to moderation of food prices, including vegetables.

On the domestic equity market front, the Sensex advanced 267.64 points, or 0.37 per cent, to 71,822.83. The Nifty rose 96.80 points, or 0.45 per cent, to 21,840.05.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth ₹376.32 crore, according to exchange data.