The rupee appreciated 8 paise to 76.40 against the US dollar in opening trade on Wednesday in anticipation of foreign fund inflows through LIC IPO.
At the interbank foreign exchange, the rupee opened at 76.46 against the American dollar, then gained further ground to quote at 76.40, registering a rise of 8 paise from the last close.
On Monday, the rupee had settled at 76.48 against the US dollar. The forex market was closed on Tuesday on account of Id-Ul-Fitr.
The government is selling 22,13,74,920 shares in Life Insurance Corporation of India (LIC) at a price band of Rs 902-949 a share, aiming to raise about Rs 21,000 crore.
The issue will open for institutional and retail buyers from May 4 -9. The anchor investor portion of LIC's initial public offering has been fully subscribed, garnering around Rs 5,620 crore.
According to Sriram Iyer, Senior Research Analyst at Reliance Securities, foreign fund inflows from the LIC IPO could offset a strong dollar, which continued to extend gains amid aggressive rate hikes by the US Fed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.05 percent higher at 103.51.
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"Asian currencies and equities have started mixed ahead of the Fed meeting tonight, but oil prices remained above the USD 100 level and could keep appreciation bias capped," Iyer added.
On the domestic equity market front, the 30-share Sensex was trading 21.42 points or 0.04 per cent lower at 56,954.57 points, while the broader NSE Nifty declined 9.65 points or 0.06 per cent to 17,059.45.
Global oil benchmark Brent crude futures rose 0.99 percent to USD 106.01 per barrel. Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,853.46 crore, as per stock exchange data.