Rupee trades in narrow range against US dollar in early trade today

The rupee witnessed range-bound trading in initial deals against the US dollar on Tuesday, as market participants remained on the sidelines ahead of the release of key macroeconomic data.

Forex traders said focus will be on the US Feb CPI print and on the domestic front, Feb CPI print and Jan IIP are due post market hours.

Meanwhile, positive domestic equities, foreign fund inflows and broad weakness of the American currency in the overseas market aided investor sentiments, while rising crude oil prices weighed on the local unit.

At the interbank foreign exchange, the rupee opened at 82.74 against the greenback, then touched 82.72, registering a rise of 3 paise over its previous closing price.

On Monday, the rupee declined by 8 paise to settle at 82.75 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent lower at 104.80.

Brent crude futures, the global oil benchmark, advanced 0.36 per cent to USD 82.51 per barrel.

Forex traders said FDI-related inflows may support the rupee at lower levels. A recovery in domestic equities also supported the rupee. However, market participants are likely to remain cautious ahead of the release of inflation data from India and the US.

"Rupee ended at 82.75 on Monday. It is likely to open around 82.75 and trade in an 82.70-82.80 range with sideways price action," IFA Global Research Academy said in a note.

On the domestic equity market front, Sensex advanced 413.78 points, or 0.56 per cent, to settle at 73,916.42 points. The Nifty rose 94.10 points, or 0.42 per cent, to close at 22,426.75 points.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Monday as they bought shares worth Rs 4,212.76 crore, according to exchange data.