Rupee inches 5 paise higher to 72.88 against US dollar in early trade

The Indian rupee inched higher on Wednesday, adding to the 32 paise jump in the previous session, tracking a pullback in US treasury yields and positive domestic equities.

At the interbank forex market, the local unit opened at 72.97 against the US dollar, then inched higher to 72.88 against the greenback, registering a rise of 5 paise over its previous close.

On Tuesday, the rupee had settled 32 paise higher at 72.93 against the American currency.

Forex traders said the local unit opened on a positive note led by a pullback in US treasury yields.

Bond yields fell on Tuesday after soothing remarks from US Treasury Secretary Janet Yellen downplaying prospects of runaway inflation, Reliance Securities said in a research note.

Markets will look to the global cues amid lack of any data from the domestic markets, the note added.

However, most Asian currencies have started weaker against the US dollar and could limit the appreciation bias in the local unit, traders said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.23 per cent to 92.16 ahead of the inflation data this Wednesday.

On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 285.55 points higher at 51,311.03, and the broader NSE Nifty advanced 85.30 points to 15,183.70.

Brent crude futures, the global oil benchmark, fell 0.80 per cent to USD 66.98 per barrel.

Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 2,801.87 crore on Tuesday, according to exchange data.