Mumbai, Feb 5 (PTI) The rupee appreciated 13 paise to close at 90.34 against the US dollar on Thursday, on trade deal optimism and overnight decline in commodity prices, even as the upside remained capped as investors look for more clarity on the India-US trade deal.

Forex traders said significant corporate dollar demand and a weak trend in domestic equities restricted the upside for the local unit.

Notwithstanding the trade-deal optimism, forex traders said market participants are now shifting focus from celebration to verification as no official documents have been released, and neither side has formally published the final terms.

Moreover, investors are awaiting cues from Friday's RBI interest rate announcement.

At the interbank foreign exchange, the rupee opened at 90.52 and touched an early high of 90.06 and a low of 90.53 against the greenback.

The domestic unit finally settled at 90.34, higher by 13 paise from its previous close.

"We expect the rupee to trade with a positive bias amid optimism over the India-US trade deal, despite more clarity over the terms of the deal. However, weak domestic markets and a strong Dollar may cap sharp upside," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

Choudhary further noted that "elevated crude oil prices and tensions between the US and Iran may also pressurise the rupee at higher levels. Investors will focus on RBI's monetary policy on Friday".

According to Choudhary USD-INR spot price is expected to trade in a range of 90 to 90.50.

Dilip Parmar, Research Analyst, HDFC Securities, said that the Indian rupee is regaining edge as the India-US trade has eliminated the "ambiguity discount" that was weighing on the currency.

"The revival in Foreign Institutional Investor interest in domestic equities also provided a natural cushion for the rupee. With tariff uncertainty fading, the path for the rupee looks increasingly stable. The spot USD-INR is expected to consolidate between 90.05 and 90.88 in the coming days," Parmar said.

RBI Governor Sanjay Malhotra-headed six-member rate-setting panel on Wednesday started deliberations on the next set of bi-monthly interest rates.

The decision of the Monetary Policy Committee (MPC) will be announced by Malhotra on Friday morning.

Experts are of the view that the RBI has already reduced the key short-term lending rate (repo) by 125 basis points since last February, and may go for status quo on rates, as there are no pressing concerns on either growth or inflation fronts.

However, some are of the opinion that the central bank may go for one more rate cut to further reduce borrowing costs.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.29 per cent higher at 97.90.

Brent crude, the global oil benchmark, was trading 1.43 per cent lower at USD 68.47 per barrel in futures trade.

On the domestic equity market front, Sensex tumbled 503.76 points to settle at 83,313.93, while the Nifty dropped 133.20 points to 25,642.80.

Foreign Institutional Investors turned net sellers after two days and offloaded equities worth Rs 2,150.51 crore on Thursday, according to exchange data. PTI DRR HVA