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The rupee appreciated 16 paise to close at 85.39 (provisional) against the US dollar on Friday, tracking a decline in the American currency in the overseas market and a weak tone in crude oil prices.

Forex traders said Asian currencies, including the rupee, gained ground on renewed hopes of trade deals with the US.

US President Donald Trump announced a trade agreement with Vietnam, and that injected a dose of optimism that perhaps more such agreements could be in the pipeline before the crucial July 9 deadline, according to forex traders.

At the interbank foreign exchange, the domestic unit opened at 85.44 against the American currency and touched an intra-day high of 85.30 and a low of 85.50 during the session.

The local unit finally settled at 85.39 (provisional), 16 paise higher than its previous closing price.

On Thursday, the rupee pared initial losses and edged up 7 paise to close at 85.55 against the dollar.

"We expect the rupee to gain on falling US dollar and weak tone in crude oil. However, uncertainty over trade tariffs may cap sharp gains," Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.24 per cent to 96.94.

Brent crude, the global oil benchmark, fell by 1.18 per cent to USD 67.99 per barrel in futures trade.

According to Choudhary, USDINR spot price is expected to trade in a range of 85.10 to 85.70, Choudhary said.

Meanwhile, in the domestic equity market, the Sensex advanced 193.42 points, or 0.23 per cent, to close at 83,432.89, while Nifty rose 55.70 points, or 0.22 per cent, to 25,461.00.

Foreign institutional investors (FIIs) offloaded equities worth Rs 1,481.19 crore on a net basis on Thursday, according to exchange data.

On the domestic macroeconomic front, the Indian services sector growth touched a ten-month high in June aided by robust expansion in international sales and job creation, amid positive demand trends and ongoing improvement in sales, a monthly survey said on Thursday.

The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 58.8 in May to 60.4 in June, driven by sharp upturn in new business orders. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)