Mumbai, May 10 (PTI) The rupee appreciated by 12 paise to close at 81.94 against the US dollar in a restricted trade on Wednesday as investors remained on the sidelines ahead of the crucial US inflation data. Forex traders said significant foreign fund inflows, a firm trend in domestic equities and easing crude oil prices also supported the local unit. At the interbank foreign exchange market, the local unit opened at 82.06 against the US currency and moved in a range of 81.94 to 82.09 in the day trade.

The local units finally settled at the day's high of 81.94, registering a gain of 12 paise over its previous close. On Tuesday, the rupee closed at 82.06 against the US currency. Traders said investors were cautious as they awaited inflation data from the US expected later in the day.

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The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 101.67. Global oil benchmark Brent crude futures fell 1.39 per cent to USD 76.36 per barrel. "The Indian rupee recovered after Tuesday's sell-off as import commodity prices declined ahead of the crucial US inflation data. The local unit opened flat versus the US dollar and consolidated between 82.09 to 81.96 with low volumes," said Dilip Parmar, Research Analyst, HDFC Securities. In the near-term, "we expect spot USDINR to consolidate in the range of 82.30 to 81.80," Parmar added.

India's inflation data, due later in the week, will provide cues on the Reserve Bank of India's next rate hike moves, traders said. On the domestic equity market front, the 30-share BSE Sensex advanced 178.87 points or 0.29 per cent to end at 61,940.20 points, and the broader NSE Nifty rose 49.15 points or 0.27 per cent to 18,315.10 points. Foreign Institutional Investors (FIIs) were net buyers in the capital market on Wednesday as they purchased shares worth Rs 1,833.13 crore, according to exchange data.

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According to Jateen Trivedi, VP Research Analyst at LKP Securities, the rupee traded in the range between 81.95-82.08 zone, while the dollar index remained muted between USD 101.30 - USD 101.50.

Forex participants are largely waiting for the CPI data from the US and the Karnataka exit poll results.

The muted trend of the dollar index may see an uplift on CPI data as any higher Core CPI from the expected 5.6 per cent will create buying in the dollar, and another rate hike possibility will increase, Trivedi said.

Whereas a drop in number will strongly be cheered as interest rate pause will likely be on cards on lower CPI data. Rupee can be seen breaking the range of 81.80-82.15 in the next session, Trivedi added.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)