Rupee appreciated 7 paise to 83.82 against the US dollar in morning trade on Friday, supported by significant foreign fund inflows and a positive trend in domestic equities.
Forex traders said a rise in global risk sentiments supported the rupee, while recovery in the US dollar and month-end dollar demand from importers and oil marketing companies (OMCs) weighed on investor sentiments.
At the interbank foreign exchange market, the local unit opened at 83.83, then gained ground to touch 83.82, registering a rise of 7 paise from its previous close.
On Thursday, the rupee appreciated 8 paise to close at 83.89 against the American currency.
According to forex traders, MSCI rebalancing flows could take the rupee higher.
"Some appreciation in the rupee appears likely, with anticipated MSCI inflows of around $3 billion. The rupee is likely to trade within a range of 83.75 to 83.90, while in the medium-term, a range of 83.60 to 84.05 is anticipated, with a bias towards the upside," CR Forex Advisors MD-Amit Pabari said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.03 per cent to 101.37 points.
Brent crude, the international benchmark, gained 0.29 per cent to $80.17 per barrel in futures trade.
In the domestic equity market, the 30-share BSE Sensex advanced 227.63 points, or 0.28 per cent, to 82,362.24 points, while the Nifty was up 65.70 points, or 0.26 per cent, to 25,217.65 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday, as they purchased shares worth ₹3,259.56 crore, according to exchange data.
Meanwhile, Moody's Ratings on Thursday raised India's GDP growth forecast for 2024 and 2025 calendar year to 7.2 per cent and 6.6 per cent, respectively, on strong broad-based growth.