Rupee rises 31 paise to ₹85.05 against US dollar in early trade

The rupee appreciated 31 paise to ₹85.05 against the US dollar in early trade on Wednesday, supported by gains in domestic equities and positive macroeconomic data.

Forex traders said a surge in global crude oil prices may weigh on the rupee. Over the last few sessions, Brent crude prices have surged to near USD 66 per barrel, which could widen India's trade deficit.

Moreover, foreign fund outflows also contained the appreciation of the domestic unit to some extent.

At the interbank foreign exchange, the domestic unit opened at ₹85.05 against the greenback, registering a gain of 31 paise over its previous close.

In initial trade, the local unit also touched ₹85.23 against the greenback.

On Tuesday, the rupee reversed early gains to settle flat at ₹85.36 against the US dollar. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.05% at 100.95.

Brent crude, the global oil benchmark, fell 0.54% to USD 66.27 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex advanced 250.80 points, or 0.31%, to 81,399.02, while the Nifty rose 58.45 points, or 0.24%, to 24,636.80.

Foreign institutional investors (FIIs) offloaded equities worth ₹476.86 crore on a net basis on Tuesday, according to exchange data.

On the domestic macroeconomic front, India's retail inflation eased to a nearly six-year low of 3.16% in April, creating enough room for the Reserve Bank to go for another round of rate cut in the June monetary policy review.