The rupee appreciated by eight paise to close at 88.21 (provisional) against the US dollar on Wednesday, supported by strong domestic markets and optimism over a potential trade deal between India and the US, news agency PTI reported.

Forex traders said upbeat market sentiment, driven by expectations of a trade deal and easing crude oil prices, boosted investor confidence, even as importer demand for dollars limited sharper gains. Investors also remained cautious ahead of the upcoming US Federal Open Market Committee (FOMC) meeting.