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Mumbai, July18 (PTI) The rupee gave up initial gains to settle 4 paise lower at 86.16 (provisional) against the US dollar on Friday, dragged by foreign fund outflows, rising global crude oil prices and a steep decline in domestic equity markets.

However, a weak greenback against major currencies prevented a sharp depreciation in the local unit, forex traders said.

At the interbank foreign exchange, the rupee opened higher against the US dollar at 85.99 and moved in the range of 85.97-86.23 before closing at 86.16 (provisional), down 4 paise from its previous close.

The rupee declined 20 paise to settle at 86.12 against the US dollar on Thursday.

Foreign investors turned sellers while "dollar buyers bought heavily to take rupee lower before we saw the Reserve Bank of India stepping in to control the pace of the fall", said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

We expect rupee to remain in the weakening mode till the deal with US is finalised and if it is not done then we could see rupee travel to 87 levels. For Monday, we expect rupee to trade in the range of 85.90-86.40, he said.

Negotiations between India and the US are underway to iron out pending issues for a trade deal, the Ministry of External Affairs said on Thursday. The comments came a day after US President Donald Trump said Washington is very close to the trade pact with India.

Brent crude, the global oil benchmark, rose sharply by 1.17 per cent to USD 70.33 per barrel in futures trade.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.36 per cent to 98.38.

In the domestic equity markets, the Sensex declined 501.51 points to settle at 81,757.73, while the Nifty dropped 143.05 points to close at 24,968.40.

Foreign institutional investors (FIIs) sold equities worth Rs 3,694.31 crore on a net basis on Thursday, according to exchange data. 

(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.)