Mumbai: The rupee Wednesday gained seven paise to close at 55.51 against the dollar on smart recovery in local equities after a five-day losing streak and selling of the US currency by exporters.
Forex dealers said some foreign fund flows and weakening of dollar overseas also aided the local currency to some extent.
The rupee commenced strong at 54.46 against the dollar from its previous closing of 54.58 at the Interbank Foreign Exchange (Forex) market.
It moved in a range of 54.40-54.57 before settling at 54.51, up seven paise, or 0.13 percent from its previous closing.
Snapping a five-day downward march, the BSE benchmark Sensex today shot up by 187.97 points to 18,414.45.
Meanwhile, foreign institutional investors pumped in Rs 40.22 crore into local equities, as per provisional BSE data.
"A higher opening in the domestic equity market and strengthening of the euro and yen against the dollar overseas, supported the rupee," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
The dollar index was down by 0.06 percent against a basket of six major global currencies.
Next major movement in the rupee will be seen on Friday after the numbers for February industrial output and March consumer inflation are announced, First Rand Bank Treasurer K Hariharan said.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "Rupee traded strong for the day, taking cues from global markets where dollar traded weak against the major currencies. After a five day fall, equity markets traded strong throughout the day and closed up by over 1 percent which strengthened the rupee further."
Meanwhile, the premium for the forward dollar dipped further on continued receivings by exporters.
The benchmark six-month forward dollar premium payable in September tumbled to 179-1/2-181 paise from Tuesday's close of 187-189 paise.
Far-forward contracts maturing in March also dropped to 352-1/2-354-1/2 paise from 362-364 paise.
The RBI fixed the reference rate for the US dollar at 54.5340 and for euro at 71.3260.
The rupee inched up further against the pound sterling to 83.49 from previous close of 83.50 and remained firm against the Japanese yen to 54.76 per 100 yen from 55.15.
It, however, declined further against the euro to 71.42 from last close of 71.17.
The Forex and Money markets will remain closed tomorrow, April 11, on account of 'Gudi Padwa'.