New Delhi: Extending its spectacular rebound rally, the rupee surged ahead to end at a fresh 2-1/2 month high of 64.15 in a highly volatile forex market following frantic dollar unwinding in the face of fading Fed rate hike rhetoric.


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A smart record breaking rally in local equities alongside robust capital flows into equities largely backed the trading sentiment.


Though, the home currency encountered some wobble ahead of the FOMC rate decision and remained little shaky early part of the trade as currency traders preferred to stay on the sidelines.


However, ovecoming initial sluggishness, rupee made an incredible comeback during the mid-week trade after the US currency took a big knock amid the Fed indicating it will maintain a slow pace of monetary tightening.


Heavy dollar unwinding by speculative traders in the face of abundant capital inflows supplemented further strength to the local currency.


Bearish traders and investors largely dumped dollar post FOMC outcome with the currency becoming increasingly sensitive to monetary policy speculations, a forex dealer commented.


The home currency resumed substantially lower at 64.41 as against last weekend level of 64.32 at the Interbank Foreign Exchange (forex) market due to month-end dollar demand from importers and drifted further to touch a low of 64.46.


But, taking a smart U-turn towards the fag-end trade, the local unit bounced back to hit a high of 64.06 - the level not seen since May this year.


It finally settled down at 64.15 after giving back some gains, still showing a handsome gain of 17 paise, or 0.26 percent.


Rupee has appreciated by a solid 45 paise in the last three weeks.


Meanwhile, India's foreign exchange reserves touched a new record high of USD 391.33 billion after it rose by USD 2.27 billion in the week to July 21, aided by increase in foreign currency assets (FCAs), RBI data showed.


Foreign funds remained highly bullish on Indian markets and infused worth USD 358.47 mln in local equities as per provisional data from stock exchanges.


The RBI, meanwhile fixed the reference rate for the USD at Rs 64.1483 and Euro at Rs 74.9829, respectively.


In the meantime, International benchmark Brent crude once against power ahead to close above the key psychological USD 50 a barrel mark.


In worldwide trade, the greenback took a sharp plunge to hit fresh multi-month lows against major world currencies during the week after the central bank's cautious and more dovish statements on inflation readings sparked fresh uncertainty over the possibility of a third rate hike this year amid rising political uncertainty.


The dollar index a measure of the US currency against a basket of six trade-weighted peers drifted further to 93.20 as against 93.780 previously.