USD/INR closed at 71.98 against its open at 72.06. Dollar closed at fresh eight-week low Thursday as investors risk appetite improved on easing crude oil prices amid weakness in greenback.Dollar index is trading weak and crude oil prices remain the same. Some foreign banks including JP Morgan Chase are seen selling tracking the fall in dollar.
The greenback retreated from a 16-month peak against a basket of currencies after US retail inflation was in-line with market expectation amid a strong euro and pound.
The euro and pound gained as UK Prime Minister Theresa May obtained backing from her cabinet on her Brexit deal, which she now has to convince parliament to approve.
Investors brushed off a government report on US consumer prices that showed domestic inflation grew at a moderate annual pace in October, although they recorded their biggest monthly increase in nine months as expected.
US consumer prices increased the most in nine months in October pointing to steadily rising inflation that likely will keep the Federal Reserve on track to raise interest rates again next month.
Dollar index, which weighs greenback against a basket of six major currencies, traded at 96.87 Thursday compared to 97.38 at close of Indian market on Tuesday.
On Wednesday, the Labour Department data showed US Consumer Price Index rose 0.3% last month after edging up 0.1% in September. In the 12 months through October, the CPI increased 2.5 percent, picking up from September's 2.3% rise.
Adding to that, Brent crude oil prices retreated further on Thursday, pressured by rising supply amid a expected slow down and a glum economic outlook.
Nifty closed at 10,601.55, while the benchmark Sensex closed at 35,250.16.