Shrugging off initial weakness, the rupee today ended on a strong note jumping 30 paise at 54.17 amid fresh US dollar sales by exporters and capital inflows.
A flattish closing in broader equity benchmarks, which barely closed in the negative terrain, and a better dollar in overseas markets did not have any major impact on rupee, a forex dealer said.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced weak at 54.52 a dollar from overnight close of 54.47 and immediately touched a low of 54.54.
However, the rupee recovered on dollar selling and rallied further to a high of 54.15 before settling at 54.17, a rise of 30 paise of 0.55 per cent.
Yesterday, it had fallen by 40 paise or 0.74 per cent.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said," Rupee ended the session on a strong note due to sharp rally in risk currencies against dollar coupled with rumoured FII inflows."
Forex dealers attributed the late rally in rupee to fresh dollar selling by exporters and some banks also.
FIIs pumped in nearly Rs 300 crore in Indians stocks today, as per provisional exchanges data.
The S&P BSE Sensex today moved in a narrow range between positive and negative terrain before closing down by a mere 8.35 points. Yesterday, it had tumbled by 317.39 points.
Globally, the dollar index, a gauge of six major global rivals, was up by 0.05 per cent in afternoon trades.
"After witnessing a weak session yesterday, rupee closed today's session on a positive note. There was dollar selling in the market by exporters near 54.50 levels which made rupee to appreciate against the US dollar," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
The premium for the forward dollar ended mostly stable.
The benchmark six-month forward dollar premium payable inJuly finished at its overnight closing level of 171-1/2-172-1/2 paise.
Far-forward contracts maturing in January settled at 337-338-1/2 paise from 337-339 paise.
The RBI fixed the reference rate for the US dollar at 54.4270 and for euro at 71.9061.
The rupee also rebounded against the pound sterling to 82.67 from previous close of 83.12.
It also turned positive to end against the Japanese yen at 58.13 per 100 yen from 58.63.
Rupee improved further against the euro to 71.35 from last close of 71.81.