The Indian rupee appreciated by 2 paise to 83.23 against the US dollar (22.68 against the UAE dirham) in early trade on Wednesday.

This comes on the back of a weaker American currency and inflow of foreign funds in the domestic equity markets. Forex traders said surging crude oil prices and negative trend in equity markets, however, capped the rise in the South Asian currency.

At the interbank foreign exchange, the Indian rupee opened at 83.24 against the dollar (22.68 against dirham) and then inched up to 83.23 (22.67), registering a gain of 2 paise over its previous closing rate.

Oil prices jumped in Asia with the Brent crude contract racing past $92 per barrel following a flare-up in the Israel-Palestine conflict. Brent is now up nearly 9 per cent since the breakout of the conflict.

The two-year U.S. yield hit a multi-year high of 5.25% in New York trading, while the 10-year climbed to 4.86% after U.S. retail sales last month rose more than expected.

Oil and US yields will keep USD/INR "well-bid" through the session, a spot foreign exchange trader at a mid-sized private bank said, and that the Reserve Bank of India (RBI) will be "holding up" the rupee once again.

The RBI has over the last several sessions intervened to make sure that the rupee does not fall below the 83.29 record low, according to traders. The RBI's stranglehold on the rupee has pushed very short-dated realized volatility to the lowest in nearly 20 years.

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