The rupee appreciated by 23 paise to settle at 92.91 against the US dollar on Friday, buoyed by a weakening American currency and retreating crude oil prices amid increasing hopes of easing geopolitical tensions.

Renewed buying in domestic equity markets and fresh inflow of foreign funds also supported the local currency, forex traders said.

At the interbank foreign exchange market, the rupee opened at 92.93 and touched an intra-day high of 92.65 against the greenback. The unit also touched the day's low of 92.98 before ending the session at 92.91 against the American currency, up 23 paise from the previous closing level.

On Thursday, the rupee gained 19 paise to settle at 93.14 against the US dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee strengthened on improved global risk sentiments.

He said global markets rallied and the US dollar weakened amid declining safe-haven demand, while crude oil prices softened overnight.

"We expect the rupee to trade with a positive bias on expectations of the second round of talks between the US and Iran as well as the ceasefire between Israel and Lebanon," Choudhary said, adding, "USD-INR spot price is expected to trade in a range of Rs 92.50 to Rs 93.20." According to Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, the rupee traded stronger on softer dollar index.

"The positive tone is also backed by FII inflows and expectations of India-US trade discussions, which are supporting capital flows into domestic markets," Trivedi said, adding, "Overall, the rupee remains supported in the near term, but sustainability will depend on the outcome of geopolitical developments and crude price stability." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 97.90.

Brent crude, the global oil benchmark, was trading 3.23 per cent down at USD 96.18 per barrel in futures trade.

Analysts said crude oil prices fell after US President Donald Trump expressed optimism over a potential agreement with Iran, easing concerns over prolonged supply disruptions.

On the domestic equity market front, the 30-share Sensex jumped 504.86 points, or 0.65 per cent, to settle at 78,493.54, while the Nifty rose 156.80 points, or 0.65 per cent, to 24,353.55.

Foreign Institutional Investors bought equities worth Rs 683.20 crore on Friday, according to exchange data