The Indian rupee on Thursday strengthened against the US dollar, tracking gains in Asian peers. Most emerging market asserts rose as risk appetite improved after a slide in oil prices amid no signs of escalation in US-Iran tensions. This was the third session when the rupee traded higher.

Expectation of foreign fund inflows as Bharti Airtel Ltd looks to raise $1 billion via foreign currency convertible bonds also boosted sentiment.

In early deals today, the rupee traded at 71.44 a dollar, up 0.4% from Tuesday's close of 71.71. The Indian unit had opened at 71.42 – the day’s high so far.

Overnight, crude slipped over 4% after US President Donald Trump responded overnight to an Iranian attack on US forces with sanctions, not violence. Iran offered no immediate signal it would retaliate further over a 3 January US strike that killed one of its senior military commanders.

Back home, the yield on the 10-year government bond was at 6.58% compared with its previous close of 6.554%. Bond yield and prices moves in opposite directions.

Year to date, the rupee has weakened 0.5%, while foreign investors have bought nearly $381.80 million in Indian equities and sold $844.50 million in debt.

In pre-opening trade, the benchmark Sensex index was up 1% or 406.79 points at 41224.53 points. Year to date, the index has lost 0.5%.

Other Asian currencies also traded higher. The South Korean won was up 1%, Philippines peso 0.5%, Indonesian rupiah 0.3%, Malaysian ringgit, Taiwan dollar, China Renminbi, and Thai Baht were up about 0.2% each. However, the safe-haven Japanese yen was a tad lower.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 97.277, down from its previous close of 97.299.

(Bloomberg contributed this story)