Rupee gains 12 paise to ₹85.42 against US dollar in early trade

Rupee rose 12 paise to ₹85.42 against the greenback in early trade, buoyed by strong FII inflows and a weaker dollar index.

However, widening of trade deficit, a weaker start in the domestic equity markets and a rise in Brent crude prices capped further gains in the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened strong at ₹85.28 against the US dollar before dropping to ₹85.42, higher by 12 paise from its previous close. On Thursday, the rupee depreciated 22 paise to close at ₹85.54 against the greenback.

In the domestic equity market, Sensex declined 252.97 points to 82,277.77 in early trade, while the Nifty dropped 67.6 points to 24,994.50.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.24% at 100.641.

Brent crude, the global oil benchmark, rose 0.14% to 64.62 per barrel in futures trade.

India's exports rose 9.03% to USD 38.49 billion in April on Thursday -- the highest in six months -- driven by healthy growth in sectors such as electronics and engineering goods. However, the trade deficit widened to a five-month high of USD 26.42 billion as imports rose 19.12% year-on-year to USD 64.91 billion in April due to a rise in shipments of crude oil and fertiliser.

Foreign institutional investors (FIIs) bought equities worth ₹5,392.94 crore on a net basis on Thursday, according to exchange data.