Mumbai: Continuing its upward rally for the third straight session, the rupee on Friday rose by a whopping 58 paise to hit over three-week high of 54.26 against the US dollar on the back of a sharp rally in the local equities.
Forex dealers said sustained dollar selling by exporters on hopes of further fall in value of the American currency overseas also supported the rupee's rise.
The domestic currency moved in the range of 54.26-54.84 at the Interbank Foreign Exchange (Forex) market.
Later, it settled at day's high of 54.26, showing a rise of 58 paise, or 1.06 percent, against its previous close.
In the last three sessions, rupee has gained 147 paise, or 2.64 percent.
Meanwhile, the BSE benchmark Sensex today spurted by almost 169 points today to 19,339.39 on strong capital inflows. Foreign Institutional Investors (FIIs) pumped in a whopping Rs 1,611.43 crore (around USD 300 million), according to provisional data on bourses.
"The rupee continued to extend gains on rising foreign capital inflows amid risk sentiment in global markets. The positive tone in the domestic equity markets which rose for fresh highs on FII buying and ease in the political logjam aided the INR," Alpari Financial Services (India) CEO Pramit Brahmbhatt said.
The dollar index was down by 0.07 percent against a basket of six major currencies.
"The rupee appreciation was mainly based on the rally in the global equity markets. The euro rose to 1.30 levels, while Dollar Index was trading weak for the day," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
"Weak GDP data raised hopes of some monetary easing at the next RBI meeting on December 18th. The IIP and WPI figures due next month on 12th and 14th Dec will provide further clues on rate cut in the monetary policy review," he added.