Strong FII inflows, progress in US-China trade pact finalisation, and continuing peace in the Middle East were enough for the rupee to rise against the greenback in early Friday trade, settling at 85.49.
A rise in global crude oil prices and a slightly stronger dollar capped any further gains for the domestic unit, said traders.
Foreign institutional investors (FIIs) purchased equities worth ₹12,594.38 crore on a net basis on Thursday, according to exchange data.
At the interbank foreign exchange, the rupee opened at 85.50 against the dollar before inching up to 85.49, higher by 23 paise from its previous close. The local unit rose 36 paise to close at 85.72 against the US dollar on Thursday.
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Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP said the rupee was expected to stay in the range of 85.35-85.95 as FII inflows dominated on Thursday and Friday.
“We expect the same today (on Friday), though there could be outflows from oil, RBI buying, and FPI buying dollars,” he said.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.10 per cent at 97.24.
Brent crude, the global oil benchmark, went up 0.47 per cent to USD 68.05 per barrel in futures trade after declining in the previous session.
"Brent oil prices rose slightly in Asian trading on some resilience in US demand but were set for weekly losses this week as concerns over the Middle East demands cleared after the Iran-Israel ceasefire," Bhansali said.
Meanwhile, in the domestic equity market, Sensex rose 229.22 points to 83,985.09 in early trade, while Nifty was up 73.5 points to 25,622.50
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