The rupee started the financial year 2022-23 on a muted note and inched higher by 3 paise to 75.71 against the US dollar in early trade on Monday amid a firm trend in the domestic equity market. At the interbank foreign exchange, the rupee opened lower at 75.77 against the American dollar, then touched an early high of 75.71, up 3 paise over its previous close. The local unit also reached 75.79 in initial deals.

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On Thursday, last trading session of FY22, the rupee advanced by 16 paise to close at 75.74 against the US dollar. The local unit, however, closed the 2021-22 fiscal with overall losses of 3.61 per cent or 264 paise against the American currency due to a stronger dollar and surging crude oil prices.

The forex market was closed on Friday for the annual account closing of banks. Global oil benchmark Brent crude futures rose 0.13 per cent to USD 104.53 per barrel.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.06 per cent to 98.57. On the domestic equity market front, the 30-share Sensex was trading 1,462.66 points or 2.47 per cent higher at 60,739.35, while the broader NSE Nifty inched higher by 393.75 points, or 2.23 per cent, to 18,064.20.

Foreign institutional investors remained net buyers in the capital market on Friday as they purchased shares worth Rs 1,909.78 crore, according to stock exchange data. On the domestic macroeconomic front, India's current account deficit widened to USD 23 billion or 2.7 per cent of the GDP in the December quarter, according to the Reserve Bank of India.

The deficit was at USD 9.9 billion or 1.3 per cent of the GDP in the second quarter of the fiscal while the same stood at USD 2.2 billion or 0.3 per cent of the GDP in the year-ago period, the data on Balance of Payments showed. The Centre's fiscal deficit at the end of February stood at 82.7 per cent of the full-year budget target, mainly on account of higher expenditure, as per the government data released on Thursday.