Mumbai: The rupee appreciated 4 paise to 83.62 against the US dollar in early trade on Tuesday, ahead of the Budget presentation.
Forex traders said the local currency gained strength as crude oil prices and the American currency retreated from their elevated levels. Moreover, foreign fund inflows also supported the rupee.
At the interbank foreign exchange market, the local unit opened at 83.64, and touched an early high of 83.62, registering a gain of 4 paise from its previous close.
On Monday, the rupee consolidated in a narrow range to settle 4 paise higher at 83.66 against the American currency.
Forex traders said marketmen will closely watch the Union Budget for further cues on fiscal deficit, capital expenditure, tax revenue and GST among others.
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Finance Minister Nirmala Sitharaman will present her 7th straight Budget that would lay a roadmap for Viksit Bharat (developed India) by 2047, while giving a glimpse of 10 years' performance.
The Indian rupee has been down as dollar buying from the Reserve Bank of India (RBI), the government of India, defence, oil companies and foreign investors has kept dollar well bid.
"All in-flows seem to be getting absorbed by the RBI. Expect rupee to be range-bound on Tuesday," said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.20, lower by 0.10 per cent.
Brent crude futures, the global oil benchmark, rose 0.05 per cent to USD 82.44 per barrel.
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In the domestic equity market, the 30-share BSE Sensex was trading 11.54 points, or 0.01 per cent higher at 80,513.62 points. The broader NSE Nifty was down 7 points, or 0.03 per cent, to 24,502.25 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday as they purchased shares worth Rs 3,444.06 crore, according to exchange data.
On the macroeconomic front, the government's pre-budget Economic Survey on Monday set a conservative growth forecast of 6.5 to 7 per cent for the current fiscal.