The Indian rupee ended almost on a two-month high, appreciating by 1 paisa to close at 86.36 against the US dollar on Thursday, supported by strong domestic equities.

Forex traders said the rupee gained strength despite external pressures, benefiting from robust foreign inflows into debt markets. However, uncertainty surrounding US President Donald Trump’s tariff policies may pose challenges to its upward momentum.

At the interbank foreign exchange market, the rupee fluctuated between an intraday high of 86.20 and a low of 86.41 before settling at 86.36, marking its fifth consecutive session of gains and an overall increase of 87 paise. On Wednesday, the rupee had appreciated by 19 paise.

Dilip Parmar, research analyst at HDFC Securities, attributed the rupee’s strength to improved market sentiment and increased dollar inflows into the debt markets. “The positive economic data has further fueled the rupee’s rally,” he said. However, he cautioned that the dollar/rupee pair may experience a short-term pullback due to year-end adjustments and technical factors.

The US dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.46 per cent at 103.90.

The Euro was 0.58 per cent higher against the dollar after US policymakers held interest rates steady.