Rising for the fourth straight session, the rupee on Thursday rose by 35 paise to end at over one-week high of 61.05 against the dollar on persistent selling of the US currency from banks and exporters tracking global cues amid a surge in local equities.
The rupee resumed higher at 61.13 per dollar as against Wednesday's closing level of 61.40 at the Interbank Foreign Exchange (Forex) and strengthened further to 60.90 per dollar before ending at 61.05 per dollar, a gain of 35 paise or 0.57%. The domestic unit moved in a range of 60.90 and 61.14 per dollar during the day.
This is rupee's biggest closing level since 60.96 on September 24.
It has gained by 70 paise or 1.13% in the last four trading days.
"Strength in equity markets after recent correction and outflows provided strength to the rupee. RBI announced an OMO of Rs 10,000 crore to suck liquidity from the market," said Kiran Kumar Kavikondala, director and CEO, WealthRays Securities.
In London, the dollar fell to a three-week low against the yen on Thursday as investors cut favourable bets after minutes of the Federal Reserve's last meeting prompted many to push out expectations for the likely timing of an interest rate rise.
The BSE benchmark Sensex ended higher by 390.49 points or 1.49% to 26,637.28.
FPIs/FIIs pulled out a massive Rs 1,440.99 crore from local equities on Wednesday, as per exchange data.
Pramit Brahmbhatt, Veracity Group CEO said, "The rupee gained today (Thursday) as local equities traded strong and closed up by 1.49% for the day.
"The rupee is expected to appreciate further taking cues from the positive sentiment in the market but importers will invest to grab the advantage of this gain which will keep the local currency under pressure".
In the forward market, premium ended lower on persistent receipts by exporters.
The benchmark six-month premium payable in March closed lower at 224-226 from Wednesday's closing level of 228-230 paise and far-forward contracts maturing in September, 2015 also ended lower at 461.5-463.5 as against 463-465 paise.
The Reserve Bank of India fixed the reference rate for dollar at 61.0368 and for the euro at 77.7426.
The rupee fell against the pound sterling to 98.98 from the previous close of 98.66 and also fell to 77.95 per euro from 77.68 previously.
It also eased further to 56.71 per 100 yen from 56.70 on Wednesday.