The Indian rupee bounced back from its early lows in sync with local stocks and on Wednesday ended stronger by 19 paise at 49.69/70 against the American currency on strengthening expectations of increased capital inflows.
In fairly active trade at the Interbank Foreign Exchange (forex) market, the domestic currency recovered smartly after resuming weak at 50.02 per dollar against its previous close of 49.88/90 a dollar. It moved in a range of 50.10 and 49.61 during the day.
Forex dealers said the rupee generally moved in sync with the equity market, which shed early losses and surged to its six-month high.
They said the rupee was well supported by consistent FII inflows into equity, raising hopes of revival in the capital injections in the current fiscal.
The absence of any major dollar demand from importers also helped the local unit to strengthen its position against the greenback.
The Sensex on Wednesday gained 318 points or 2.90 per cent, extending its winning streak to the eighth straight day.
The rupee had been under tremendous pressure in view of heavy portfolio outflows throughout 2008 and the first two months of 2009.