Marking the sixth straight session of rally, the rupee recovered its early losses and closed up by two paise at 44.82/83 against the US dollar following late sale of the greenback amid weakness in the American currency overseas.
Dealers said late sale of dollars by exporters and some banks on the back of a weak dollar abroad strengthened the rupee sentiment.
Continued portfolio inflows in equity markets too aided the rupee sentiment, dealers said.
The Bombay Stock Exchange benchmark Sensex on Thursday dropped by 114.63 points or 0.62% to 18,494 after gaining 376.75 points or 2.07% in the last two sessions.
Foreign Institutional Investors have injected $786.07 million in the last five sessions since May 26.
Also, food inflation fell to 8.05% for the week ended May 21 from 8.55% in the preceding week.
Meanwhile, 10-year bonds rose for a fourth day on speculation slowing economic growth will help cool inflation and spur demand for fixed-income assets.
Yields fell to the lowest level in more than two weeks after data released this week showed gross domestic product rose 7.8% in the three months ended March 31 from a year earlier, the slowest pace in five quarters. The country?s manufacturing grew the least in four months in May.
?Bonds are probably supported by the softness in economic data that were published this week,? said Rajeev Radhakrishnan, a Mumbai-based money manager at SBI Funds Management.
The yield on the 7.8%note due April 2021 fell five basis points, or 0.05 percentage point, to 8.27% at the 5 pm close in Mumbai, according to the central bank?s trading system. The rate touched 8.46% last week, the highest level since October 2008.
The Purchasing Managers? Index fell to 57.5 in May from 58 in April.
