The dollar index fell 0.40 per cent to 98.72.

The rupee closed flat at 71.07 against the dollar on Thursday as the anxiety over US-China trade talks kept investors on the edge. At the forex market, the rupee had opened at 70.96 against the dollar. During the day, the domestic unit fluctuated between a high of 70.87 and a low of 71.15. The rupee finally settled at 71.07, unchanged from its previous close.

"Ahead of today's scheduled meeting between the world's largest economies, we did not see much participation in USD/INR, the pair traded in a very tight range," Emkay Global Financial Services Head of Currency Rahul Gupta said.

Meanwhile, US President Donald Trump said China is facing its hardest time in decades in maintaining the economy and badly wants to have a business deal with the US.

According to Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services Private, the rupee consolidated in a narrow range for the first half of the session but was weighed down following sell-off in domestic equities.

"Market participants are now awaiting for fresh updates from the meeting that will be held in the next couple of sessions between US and Chinese officials and any progress on the same could extend gains for the rupee," Mr Somaiyaa said.

Meanwhile, foreign funds pulled out Rs 485.24 crore from the capital markets on a net basis on Wednesday, provisional data showed.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.40 per cent to 98.72.

Meanwhile, the 10-year government bond yield was at 6.46 per cent on Thursday. Brent crude futures, the global oil benchmark, rose 0.24 per cent to trade at $58.46 per barrel.

On the domestic market front, the 30-share Sensex ended 297.55 points, or 0.78 per cent, lower at 37,880.40. Similarly, the broader NSE Nifty fell 78.75 points, or 0.70 per cent, to close at 11,234.55.