NEW DELHI: The rupee pared initial losses and jumped 31 paise to close at 85.31 (provisional) against the US dollar on Thursday, following a weak greenback against major crosses overseas and a decline in US treasury yields.

Forex traders said the dollar declined on weaker-than-expected ADP Non-Farm Employment data from the US.

A decline in global crude oil prices also supported the local unit, they added.

At the interbank foreign exchange, the domestic unit opened at 85.69 against the American currency and touched an intra-day high of 85.19 and a low of 85.70 during the session.

The local unit finally settled at 85.31 (provisional), 31 paise higher than its previous closing price.

On Wednesday, the rupee depreciated 3 paise to close at 85.62 against the US dollar.

"The Indian rupee rose sharply on Friday on a weak US Dollar and a decline in US treasury yields. A decline in crude oil prices also favoured the rupee. However, weak domestic markets capped sharp gains," said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.05 per cent to 96.82.

Brent crude, the global oil benchmark, fell by 1.01 per cent to USD 68.41 per barrel in futures trade.

"We expect the rupee to strengthen on a weak US Dollar and rise in risk appetite in global markets. Overall, a weak tone in crude oil may also support the domestic currency. However, uncertainty over trade tariffs may cap sharp gains," Choudhary said.

Going ahead, traders may take cues from the Non-Farm payrolls report from the US. "USD/INR spot price is expected to trade in a range of 84.90 to 85.60," Choudhary said.

Meanwhile, in the domestic equity market, the Sensex declined 170.22 points or 0.20 per cent to 83,239.47, while Nifty fell 48.10 points or 0.19 per cent to 25,405.30.

Foreign institutional investors (FIIs) offloaded equities worth Rs 1,561.62 crore on a net basis on Wednesday, according to exchange data.