The rupee Wednesday rose to its highest level in over a month and closed 10 paise up at 61.75 against the dollar following sustained selling of American currency by exporters and some banks, amid firm local equities.
At the Interbank Foreign Exchange (Forex) market, the local currency commenced weak at 61.90 a dollar from previous close of 61.85. It eased to a low of 61.92 in early trades.
However, helped by positive cues, the rupee later rebounded to a over one-month intra-day high of 61.6650, before concluding at 61.75 - a rise of ten paise or 0.16%. On Tuesday, it has gained 19 paise or 0.31%.
The benchmark S&P BSE Sensex on Wednesday rallied 67.13 points, or 0.32%, while FIIs purchased shares worth $31.23 million on Tuesday, as per Sebi data.
The dollar index was up 0.1% against a basket of six major global rivals.
The US will be releasing its service PMI and ADP Nonfarm employment data, which will be very significant for the markets, said Abhishek Goenka, founder and CEO, India Forex Advisors.
Pramit Brahmbhatt, CEO, Alpari Financial Services, (India) said: "Taking cues from strong local equities, the rupee appreciated by 10 paise to end the day. Asian currencies traded positively as tensions between Ukraine and Russia lessened. The trading range for the USD/INR pair is expected to be within 61.40 to 62.40." Election Commission announced dates for the high-stakes Lok Sabha elections to be held between April 7 and May 12.
Meanwhile, forward dollar premium ended slightly weak on sustained receipts by exporters.
The benchmark six-month premium payable in August closed a tad lower at 256-257.5 paise from 256.5-257.5 paise previously.
Far forward contracts maturing in February 2015 also softened to 500-502 paise from 503-504.5 paise.
The RBI fixed the reference rate for dollar at 61.8550 and for the euro at 84.9195.
The rupee improved further against the pound to 103.02 from 103.20 and also strengthened to 84.70 per euro from 85.12 previously. It hardened to 60.32 per 100 Japanese yen from 60.75.