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The rupee witnessed a rebound in early trade on Thursday and appreciated 11 paise to 83.42 against the US dollar, supported by positive domestic equities.
Elevated crude oil prices and sustained foreign fund outflows also dented investor sentiments, forex traders said.
Moreover, market participants remained cautious ahead of the Reserve Bank's rate-setting panel's decision to be announced on Friday, traders said,
At the interbank foreign exchange market, the local unit opened at 83.44 against the greenback. The unit hit an intraday low of 83.45 and a high of 83.42 against the greenback, higher 11 paise from its previous close.
On Wednesday, the rupee depreciated 11 paise to close at 83.53 against the US dollar.
According to Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, market participants await the RBI MPC policy decision for further cues.
The Reserve Bank's rate-setting panel on Wednesday started its three-day deliberations on the next set of monetary policy.
The decision taken at the meeting of the Reserve Bank Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) will be announced on Friday (April 5).
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.05 per cent lower at 104.19.
Brent crude futures, the global oil benchmark, rose 0.29 per cent to USD 89.61 per barrel.
On the domestic equity market front, Sensex advanced 195.66 points, or 0.26 per cent, to 74,072.48 points. The Nifty rose 45.05 points, or 0.2 per cent, to 22,479.70 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 2,213.56 crore, according to exchange data.