The rupee rose 8 paise to 85.58 against the US dollar in early trade on Tuesday amid a positive opening in the domestic equity markets and robust foreign capital inflows.

However, rising global crude oil prices and a strengthening US dollar against overseas currencies capped sharp gains in the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened at 85.62 against the greenback before rising further to 85.58, higher by 8 paise against its previous close. The local unit appreciated 2 paise to close at 85.66 against the US dollar on Monday.

"The rupee is expected to remain in the range of 85.45-85.95 today (Tuesday). As markets await the outcome of US-China trade talks, the rupee has gone into a shell within the broad range of 85-86 with daily inflows and outflows deciding the movement on either side," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

Foreign institutional investors (FIIs) purchased equities worth Rs 1,992.87 crore on a net basis on Monday, according to exchange data.

"For the day, importers may buy near 85.45 while exporters may sell above 85.80 (intra-day)", Bhansali said.

In the domestic equity market, the 30-share BSE Sensex rose 99.12 points, or 0.12 per cent, to 82,544.33 on Tuesday morning, while the Nifty rallied 32.15 points, or 0.13 per cent, to 25,135.35.

"The US dollar was steady as trade talks continued. The economic officials from the two countries (US, China) sought to defuse a bitter trade dispute while investors were less than willing to place major bets," Bhansali added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.2 per cent at 99.13.

Brent crude, the global oil benchmark, rose 0.33 per cent to USD 67.26 per barrel in futures trade.

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