The appreciated 10 paise to close at 87.78 (provisional) against the US dollar on Friday, supported by optimism around India-US trade talks and a decline in global prices.
However, FII outflows, a stronger dollar against foreign currencies, and a weak sentiment in the domestic equity markets restricted sharp gains in the local unit, according to forex traders.
At the interbank foreign exchange, the rupee opened at 87.78 against the US dollar and traded in the range of 87.63-87.85 before settling at 87.78 (provisional), up 10 paise from its previous close.
The rupee appreciated 5 paise to close at 87.88 against the US dollar on Thursday.
“The rupee traded on a positive note on optimism over the India-US trade deal…We expect the rupee to trade with a positive bias on a rise in risk appetite amid trade deal optimism and FDI inflows. Easing geopolitical tensions may also support the rupee,” Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan, said.
“Investors remain cautious ahead of US inflation data. USD/INR spot price is expected to trade in the range of ₹87.45 to ₹88.10,” he added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.10 per cent higher at 99.03.
Brent crude, the global oil benchmark, was trading lower by 0.11 per cent at $65.92 per barrel in futures trade.
On the domestic equity market front, Sensex declined 344.52 points to settle at 84,211.88, while the Nifty was down 96.25 points to 25,795.15.
Foreign Institutional Investors sold equities worth ₹1,165.94 crore on Thursday, according to exchange data.