PTI New Delhi

The rupee rose 36 paise to close at 85.72 against the US dollar on Thursday on the back of a sharp drop in the greenback and a strong show in the domestic equity markets amid rise in risk appetite.

The rupee extended its gains supported by a rise in risk appetite in global markets after the announcement of a ceasefire between Iran and Israel, forex traders said. Domestic markets rose by around one per cent each, while the US Dollar fell towards the 97 mark.

At the interbank foreign exchange, the rupee opened at 85.91 against the US dollar and traded in the range of 85.63-85.93 before settling at 85.72, up 36 paise from its previous close. On Wednesday, the rupee settled lower by 3 paise at 86.08 against the US dollar.

"The Indian rupee and equities have seen appreciation, largely due to a weaker US Dollar Index and increased dollar inflows through IPOs. The dollar index has plummeted to a three-year low amidst speculation of earlier than expected US interest rate cuts. "This speculation is fueled by reports that US President Donald Trump is actively seeking to undermine the Federal Reserve Chair, potentially paving the way for a more dovish monetary policy," Dilip Parmar, Research Analyst, HDFC Securities said.