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Mumbai: The rupee appreciated 7 paise to 88.63 against the US dollar on Thursday, supported by a weak American currency against major rivals overseas and lower global crude oil prices.

However, subdued sentiment in domestic equity markets and continued outflow of foreign capital prevented a sharp gain in the Indian currency, forex traders said.

At the interbank foreign exchange, the rupee opened at 88.51 and touched the intra-day high of 88.49 against the greenback. The unit also hit the intra-day low of 88.66 before ending the session at 88.63, up 7 paise from its previous closing level.

The domestic unit had settled with a gain of 7 paise at 88.70 against the dollar on Tuesday.

The foreign exchange markets were closed on Wednesday on account of the Prakash Gurpurab holiday.

“Indian Rupee gained some ground today on softening global crude oil prices and improved global risk sentiments. However, importer demand for Dollars capped sharp gains.

“We expect the Indian Rupee to trade with a slight negative bias on importer demand and weak domestic markets. However, weak crude oil prices may support the rupee at lower levels. We expect USDINR to trade in the range of 88.40-88.85,” Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

The rupee was supported by weakness in the dollar index; however, “persistent FII selling limited the rupee’s upside momentum, keeping the domestic currency under mild pressure”, said Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities.

“Market participants are now focused on key US economic data releases this week, including the ISM Manufacturing and Non-Manufacturing PMI, which could influence dollar movement and global risk sentiment. The rupee is expected to remain range-bound in the near term, with a trading band seen between 88.40-88.90,” Trivedi said.

According to a monthly survey released on Thursday, India’s services sector growth witnessed the slowest pace of expansion in five months in October, as competitive pressures and heavy rains in parts of the country led to a slower increase in output.

The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 60.9 in September to 58.9 in October, indicating the slowest pace of expansion since May.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.23 per cent to 99.83.

Brent crude, the global oil benchmark, rose by 1.10 per cent to USD 64.22 per barrel in futures trading.

On the domestic equity markets front, the Sensex declined 148.14 points or 0.18 per cent to settle at 83,311.01, while the Nifty fell 87.95 points or 0.34 per cent to end at 25,509.70.

Foreign institutional investors sold equities worth Rs 3,263.21 crore on Thursday, according to exchange data.