The rupee recovered from its all-time low level and appreciated 9 paise to 83.69 against the US dollar in early trade on Friday, amid a positive trend in domestic equities.

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Forex traders said foreign fund outflows from Indian equities following the government's decision to hike the tax rate on capital gains weighed on the local currency and restricted the upmove.

At the interbank foreign exchange market, the local unit opened at 83.72 against the American currency, then rose to 83.69 against the American currency, registering a rise of 9 paise from its previous close.

On Thursday, the rupee dropped by 7 paise to close at an all-time low of 83.78 against the US dollar.

"The rupee remains under significant pressure, hovering near all-time low levels. This strain is due to the government's recent decision to hike the tax rate on capital gains, sparking major outflows of Foreign Institutional Investments (FIIs).

"However, the Reserve Bank of India (RBI) has been actively capping the downside, preventing further depreciation by maintaining the rupee at around 83.75," CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.30, lower by 0.05 per cent.

Brent crude futures, the global oil benchmark, rose 0.18 per cent to USD 82.52 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 291.71 points, or 0.36 per cent higher at 80,331.51 points. The broader NSE Nifty was up 114 points, or 0.47 per cent, to 24,520.10 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 2,605.49 crore, according to exchange data.