Mumbai: The Indian rupee on Thursday appreciated by eight paise, its biggest gain in nearly a week, to close at 54.28 against the USD on continued dollar selling by exporters and mild capital inflows.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 54.30 a dollar from previous close of 54.36.
It then moved erratically in line with side-ways movements in local equities in a narrow range of 54.19 and 54.33. Rupee finally concluded at 54.28, showing a rise of eight paise or 0.15 percent.
This is rupee's best gain since 34 paise on March 15.
Helping rupee cement gains, FIIs today pumped in Rs 368 crore in Indian stocks as per provisional BSE data.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said,"Rupee traded higher against the dollar today taking cues from the euro, as markets looked past worries about Cyprus and toward manufacturing and services data due from the common- currency bloc."
The dollar index was down by 0.16 percent against its six major global rivals.
Brahmbhatt expects the rupee (spot) to trade in 54-54.60 range against the US dollar.
Meanwhile, the Indian benchmark Sensex, in a see-saw trade today, closed down by 91.32 points to end 4-month low.
Forex dealers said that hopes of more foreign funds inflow at the weekend as government will sell 5.82 percent in steel major SAIL on Friday through offer for sale (OFS) route may help rupee but month-end dollar demand can exert pressure.
"Rupee traded quite range bound today in the absence of any major data or events from the international front. Globally, Euro fell below USD 1.2900 after the eurozone PMI figures disappointed. However it did not stay there for long and recovered against the US dollar, aiding the rupee," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Meanwhile, the premium for the forward dollar fell back on renewed receipts by exporters.
The benchmark six-month forward dollar premium payable in August finished weak at 175-1/2-177 paise from overnight close of 177-178-1/2 paise.
Far-forward contracts maturing in February also settled lower at 341-1/2-343 paise from 342-344 paise.
The RBI fixed the reference rate for the US dollar at 54.2810 and for euro at 70.2280.
The rupee dropped against the pound sterling to 82.51 from last close of 82.18 while rose against the euro to 70.08 from 70.18.
It, however, remained stable against the Japanese yen to end at its overnight closing level of 57.00 per 100 yen.