The rupee rose 29 paise to 76.11 against the US dollar in early trade on Thursday, as the US currency fell in the international market.
The rupee began at 76.17 against the US dollar on the interbank foreign exchange, then gained ground to quote at 76.11, a 29-paise increase from the previous day.
The rupee had finished at 76.40 versus the US dollar on Wednesday.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, the Indian rupee opened stronger against the US dollar on Thursday following a surprise rate hike by the Reserve Bank of India and US Fed Chairman Powell pushing back against a steeper 75-basis point rate hike in the coming months.
Furthermore, foreign money inflows into domestic assets via the LIC IPO could boost sentiment.
However, Asian and developing market currencies have begun to fall, and a rise in oil prices could limit the appreciation bias. Furthermore, the bearish rupee forecast remains unchanged due to the anticipation of more 50-basis-point rate hikes by the US Fed in the coming months, according to Iyer.
The dollar index, which measures the strength of the US currency against a basket of six currencies, was 0.03 percent lower at 102.55.
The US dollar fell more in Asian trade on Thursday morning after Powell stated that the committee was not actively exploring a sharper 75-basis-point rate hike in the coming months, despite the fact that inflation remains well above the Fed’s 2 percent target.
The 30-share Sensex was trading 399.81 points, or 0.72 percent, higher at 56,068.84 points, while the wider NSE Nifty was up 125.75 points, or 0.75 percent, at 16,803.35.
Brent crude futures increased 0.35 percent to USD 110.53 per barrel, the global oil benchmark.
According to stock exchange data, foreign institutional investors were net sellers in the capital market on Wednesday, offloading shares worth Rs 3,288.18 crore.