MUMBAI: The rupee appreciated 7 paise to 74.26 against the US dollar in early trade on Wednesday supported by foreign fund inflows and optimism surrounding trade the deal between the US and China.
The local unit opened at 74.34 against the US dollar, then gained ground and touched 74.26, up 7 paise over its previous close, even as the domestic equity market was trading in the negative territory.
The local unit had settled at 74.33 against the American currency on Tuesday. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.11 per cent to 93.12.
"Investors will closely monitor the yuan to see if the Chinese currency continues to appreciate against the US dollar amid a wave of optimism after Washington and Beijing affirmed their trade deal," Reliance Securities said in a research note.
Asian currencies have started stronger against the US dollar this morning and could lend support, it added.
Meanwhile, foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,481.20 crore on Tuesday, according to provisional exchange data.
The 30-share BSE benchmark Sensex was trading 61.19 points lower at 38,782.69 and the broader NSE Nifty fell 4.65 points to 11,467.60. Brent crude futures, the global oil benchmark, rose 0.35 per cent to USD 46.02 per barrel.