The rupee traded in a narrow range in morning trade on Wednesday, as the support from positive domestic equities was negated by the strengthening of the American currency in the overseas market. At the interbank foreign exchange market, the local unit opened at 83.86 but soon pared the gains to trade at 83.92, unchanged from its previous close.

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On Tuesday, the rupee recovered from its all-time low level and settled for the day 17 paise higher at 83.92 against the US dollar. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday. Forex traders said risk aversion in the global markets, escalation of geopolitical tensions in the Middle East, and outflows by foreign investors further dented investor sentiments.

"Indian rupee is expected to open at 83.91 after a fall to 83.96 on Tuesday with dollar demand gaining traction but RBI selling dollars to keep rupee within 84 levels," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP. For the day the rupee looks to be in a range of 83.85 to 84.05 but all depending on the Reserve Bank, as to where it wants the rupee to be in the coming days, Bhansali added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, gained 0.28 percent to 103.26 points. Brent crude, the global oil benchmark, rose 0.20 percent at USD 76.63 per barrel in futures trade. "Brent oil prices dipped to USD 76.54 per barrel as mixed reading on inventories and demand concerns over slowing economic growth and weak demand kept prices under pressure," Bhansali said.

In the domestic equity market, the 30-share BSE Sensex gained 642.04 points, or 0.82 percent, to 79,235.11 points, while the Nifty increased by 233.75 points, or 0.97 percent, to 24,226.30 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth Rs 3,531.24 crore, according to exchange data.

Meanwhile, the Reserve Bank's rate-setting panel started its three-day deliberations for the next set of bi-monthly monetary policy on Tuesday amid expectations of no change in benchmark interest rate in view of concerns on inflation and economic growth remaining steady. The decision of the RBI Governor Shaktikanta Das-headed six-member Monetary Policy Committee (MPC) will be announced on Thursday.