Mumbai, Aug 21 (PTI) The rupee pared initial gains and settled on a flat note, higher by just 3 paise at 95.71 (provisional) against the US dollar on Friday, as the support from a weak dollar was negated by continued geopolitical tensions.

Forex traders said the Indian rupee traded flat to positive on a weak dollar and a positive tone in the domestic markets. However, the rupee pared initial gains as geopolitical tensions continue to simmer.

At the interbank foreign exchange, the rupee opened at 95.69, then touched an intraday high of 95.65 and a low of 95.75 and finally settled for the day at 95.71 (provisional) against the greenback, higher by 3 paise from its previous close.

On Thursday, the rupee pared initial gains and settled for the day down 1 paisa at 95.74 against the U.S. dollar.

"We expect the rupee to trade with a slight negative bias as geopolitical tensions between the US and Iran continue amid talks of crushing economic sanctions against Iran by the US administration.

"Elevated crude oil prices may also pressurise the rupee. However, a falling US dollar amid diminishing rate hike expectations may support the rupee at lower levels. Traders may take cues from services PMI data from the US," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

According to Choudhary, USD-INR spot price is expected to trade in a range of 95.50 to 96.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.25 per cent at 98.65.

Brent crude, the global oil benchmark, was trading lower by 0.42 per cent at USD 93.39 per barrel in futures trade, as the geopolitical situation in the Middle East remains tense, with fresh warnings from US President Donald Trump to countries supporting Iran.

On the domestic market front, Sensex edged up 3.11 points to settle at 77,540.83, while the Nifty settled 20.15 points higher at 24,252.

Foreign institutional investors offloaded equities worth Rs 583.36 crore on a net basis on Thursday, according to exchange data.

On the domestic macroeconomic front, the government on Thursday amended certain provisions of the Foreign Trade Policy to make it easier for exporters to invoice overseas sales and receive payments in Indian rupees.

The amendments cover exports to all countries, although the rules vary by destination.

For countries outside the Asian Clearing Union (ACU), export contracts and invoices may now be denominated in any foreign currency or Indian rupees.

Earlier, export earnings generally had to be received in a freely convertible currency. PTI DRR HVA