Currency Market Update: The rupee on Thursday recovered 9 paise to close at 83.44 (provisional) against the US dollar, tracking a firm trend in domestic markets and upbeat macroeconomic data. A weak US dollar against major crosses overseas also supported the domestic unit. 

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However, elevated crude oil prices and sustained foreign fund outflows capped the sharp gain, forex traders said.

Moreover, market participants remained cautious ahead of the Reserve Bank's rate-setting panel's decision to be announced on Friday, they added.

At the interbank foreign exchange market, the local unit opened at 83.44 against the greenback. The unit hit an intra-day high of 83.42 and a low of 83.46.

The local unit finally settled at 83.44 (provisional) against the dollar, higher by 9 paise from its previous close.

On Wednesday, the rupee depreciated 11 paise to close at 83.53 against the US dollar.

Traders said market participants are awaiting 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).

"We expect the rupee to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in the Middle East and selling pressure from FIIs may also weigh on the rupee. However, strength in the domestic equities and reports of selling of dollars by RBI may support the rupee at lower levels," said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.16 per cent lower at 104.08 on disappointing services PMI from the US and dovish Fedspeak.

US ISM services PMI fell to 51.4 in March 2024 vs 52.6 in February 2024. Meanwhile, Fed Chair Jerome Powell reiterated his wait-and-watch stance and said that the central bank needs more confidence that inflation is moving lower sustainably.

Brent crude futures, the global oil benchmark, fell 0.13 per cent to USD 89.23 per barrel.

On the domestic equity market front, Sensex advanced 350.81 points, or 0.47 per cent, to close at an all-time high of 74,227.63. The Nifty jumped 80.00 points, or 0.36 per cent, to settle at its lifetime high of 22,514.65.

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.

Meanwhile, on the domestic macroeconomic front, India's services sector witnessed one of the strongest growth rates in over 13-and-a-half years in March on the back of strong demand that spurred sales and business activity, a monthly survey said on Thursday.