The Indian rupee declined by 22 paise to close at 85.54 against the US dollar on Thursday, pressured by strong demand for the greenback from importers and continued foreign fund outflows. However, gains in domestic equities and a fall in crude oil prices helped limit the currency’s losses, according to forex traders.At the interbank foreign exchange market, the rupee opened at 85.53 and traded in a range of 85.48 to 85.73 during the session. It eventually settled at 85.54 per dollar, marking a depreciation of 22 paise from its previous close.On Wednesday, the rupee had ended 4 paise higher at 85.32, after paring most of its intraday gains. Over the last two sessions, the domestic unit started on a strong note, reaching levels near 84.62 on Tuesday and 85.05 on Wednesday, but lost momentum later in the day.“Possibly the buying of USD was on account of the tension between India and Pakistan, else rupee should have appreciated to 85 levels today. Crude oil was also lower, which was also positive for the rupee,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP told PTIBrent crude futures, the global benchmark for oil prices, dropped 3.72% to USD 63.63 per barrel, providing some relief to the Indian currency by lowering import costs.Meanwhile, the dollar index, which measures the greenback’s strength against six major currencies, was down 0.28% at 100.75.Looking ahead, Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee could trade with a positive bias, supported by gains in domestic markets and improved global risk sentiment. “Easing geopolitical tensions between India and Pakistan and easing trade tariff tensions between the US and China may also support the rupee,” he said.Choudhary noted that traders would monitor US economic indicators including the PPI, retail sales, Empire State manufacturing index, industrial production, and weekly unemployment claims. He expects the USD/INR spot rate to trade between 85.20 and 85.90.On the equities front, the Indian stock markets were volatile but ended the day with strong gains. The 30-share BSE Sensex rebounded from a weak start to rally 1,200.18 points or 1.48% to close at 82,530.74. Similarly, the NSE Nifty advanced 395.20 points or 1.60% to finish at 25,062.10.Foreign institutional investors (FIIs) were net buyers, investing Rs 5,392.94 crore in Indian equities on Thursday, according to exchange data.Market participants are now keenly awaiting comments from US Federal Reserve Chair Jerome Powell, whose speech later in the day could offer clues on the future path of monetary policy easing.