Sustained foreign fund inflows supported the rupee though the gains were capped by hardening crude oil prices, traders said.
Mumbai: The rupee pared its initial losses to settle flat at 70.97 against the US dollar on Thursday after the US-China trade deal hopes enthused investor sentiments.
Sustained foreign fund inflows supported the domestic unit though the gains were capped by hardening crude oil prices that breached the USD 62 per barrel mark, forex brokers said.
At the interbank foreign exchange market, the rupee had opened weak at 71.10 against the US dollar. During the day, the domestic unit fluctuated between a high of 70.88 and a low of 71.11.
The rupee finally settled at 70.97, unchanged from its previous close.
"After opening on a weaker note, the rupee rose marginally against the US dollar after comments from the Chinese ministry that China and the US have both agreed to cancel in phases the tariffs imposed during their prolonged trade war," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services Private Ltd.
Somaiyaa further said that the optimism regarding the US-China trade deal has led to an appreciation in the rupee and across major equity markets.
On the domestic market front, the 30-share Sensex ended 183.96 points, or 0.45 per cent higher at 40,653.74. Similarly, the broader NSE Nifty ended with a gain of 46 points, or 0.38 per cent, at 12,012.05.
Foreign funds purchased shares worth Rs 1,011.49 crore from the capital markets on a net basis on Wednesday, provisional data showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 97.83.
Meanwhile, the 10-year government bond yield was at 6.51 per cent on Thursday.
Brent crude futures, the global oil benchmark, rose 1.31 per cent to trade at USD 62.55 per barrel.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.8861 and for rupee/euro at 78.5116. The reference rate for rupee/British pound was fixed at 91.3207 and for rupee/100 Japanese yen at 65.00.