The Indian rupee extended rebound on Thursday tracking weakness in dollar overseas. The dollar index is seen easing to near 97 mark on Thursday, its lowest level in more than three years amid easing geopolitical tensions and expectations of Federal Reserve rate cuts. The domestic currency opened at Rs 85.91 per dollar and climbed to a high of 85.87 so far during the day. Yesterday, rupee gave up its gains and settled for the day lower by 2 paise at 86.07 against the US dollar. A strong show in the domestic equity markets prevented steep losses in the local unit. Indian shares rose sharply on Wednesday as the fragile Iran-Israel truce took hold and balanced comments from Federal Reserve Chair Jerome Powell prompted traders to price in two Fed cuts by the end of 2025, with a first move in September far more likely than next month. The benchmark 30-share BSE Sensex jumped 700.40 points, or 0.85 percent, to 82,755.51, with IT, media and rate-sensitive auto stocks pacing the gainers. The broader NSE Nifty index closed up 200.40 points, or 0.80 percent, at 25,244.75 while the BSE mid-cap and small-cap indexes added 0.6 percent and 1.6 percent, respectively.