Mumbai, May 8 (PTI) The rupee pared its losses and ended with a sharp gain of 71 paise at 93.51 against the US dollar on Friday amid a volatile situation in West Asia, triggering renewed concerns over energy supplies.

Forex traders said investor sentiments were affected after Iran accused the US of violating the ceasefire as the US carried out fresh attacks in the Strait of Hormuz and civilian areas, while President Donald Trump said the ceasefire was still in effect.

Brent oil prices, which had fallen to USD 98 per barrel amid the US-Iran peace deal, edged higher to around USD 100 per barrel as investors weighed the prospects for a Middle East peace deal.

At the interbank foreign exchange market, the rupee opened at 94.58 against the US dollar, then lost momentum and touched 94.68 against the American currency, registering a fall of 46 paise over its previous close. However, it pared losses and ended Friday's session at 93.51, up 71 paise over its previous close.

On Thursday, the rupee settled 27 paise higher at 94.22 against the greenback.

Forex traders said risk aversion in global markets and weak domestic equities also weighed on the rupee.

"We expect the rupee to trade with a slight negative bias amid renewed geopolitical tensions in the West Asia war. Recovery in crude oil prices and weak global markets may also pressurise the rupee.

"FII outflows may further drag the rupee lower. However, we do not expect any major aggression. Traders may also take cues from non-farm payrolls data from the US. USD-INR spot price is expected to trade in a range of 94.10 to 94.90," Anuj Choudhary, Research analyst at Mirae Asset ShareKhan.

On Friday, the United Arab Emirates responded to a missile and drone attack hours after the US said it thwarted attacks on three Navy ships in the Strait of Hormuz.

Iranian state media said the country's forces exchanged fire with "the enemy" on Qeshm Island in the Strait of Hormuz. It also reported loud noises and continuous defensive fire in western Tehran late Thursday night.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.91, down 0.15 per cent.

Brent crude, the global oil benchmark, was trading lower by 0.25 per cent at USD 99.81 per barrel in futures trade.

On the domestic equity market front, Sensex fell 516.33 points to settle at 77,328.19, while the Nifty dropped 150.50 points to 24,176.15.

Foreign Institutional Investors offloaded equities worth Rs 4,110.60 crore on Friday, according to exchange data.

India's forex reserves dropped by USD 7.794 billion to USD 690.693 billion during the week ended May 1, the RBI said on Friday. In the previous reporting week ended April 24, the overall reserves declined by USD 4.82 billion to USD 698.487 billion. PTI DRR HVA

Rupee volatility strengthens as West Asia tensions, crude price movement, and foreign outflows weigh on currency sentiment. The rupee recovered sharply against the US dollar and closed higher amid heightened geopolitical tension in West Asia, with market sentiment affected by renewed concern over energy supplies, movements in Brent crude, global risk aversion, and weakness in domestic equities. Forex traders also noted foreign institutional investor outflows and expected near-term volatility in the USD-INR range, while the dollar index eased, Brent crude traded near the USD 100 level, and India's foreign exchange reserves declined in the latest reporting week.