The rupee pared some of its initial gains to settle 5 paise higher at 74.54 (provisional) against the U.S. dollar on Thursday amid a firm trend in domestic equities.
At the interbank forex market, the local unit opened at 74.48 against the greenback and witnessed an intra-day high of 74.47 and a low of 74.55 during the session.
On Wednesday, the rupee had settled at 74.59 against the U.S. dollar.
"Indian rupee consolidated in the range of 74.65 to 74.40 for the fifth day in absence of fresh cues. Traders are in dilemma as at one end risk-on sentiments and dollar inflows are in favour of rupee while on other hand higher crude oil prices and central bank's interventions adding pressure on rupee," Dilip Parmar, Research Analyst, HDFC Securities.
Mr. Parmar further added that Spot USDINR is likely to remain in range of 74.40 to 74.65 for few more days amid dollar inflows and stronger regional currencies.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.08% to 92.33.
On the domestic equity market front, the BSE Sensex ended 254.80 points or 0.48% higher at 53,158.85, while the broader NSE Nifty advanced 70.25 points or 0.44% to 15,924.20.
Forex traders said foreign fund outflows and firm crude oil prices could weigh on investor sentiment and cap the appreciation of the local unit.
Global oil benchmark Brent crude futures declined 0.58% to $74.33 per barrel.
Foreign institutional investors were net sellers in the capital market on Wednesday as they offloaded shares worth ₹1,303.95 crore, as per exchange data.