After touching a nearly three-year high during the day, the rupee on Wednesday closed 10 paise up at 44.08/09 -- a three-and-a-half months high -- against the US currency on increased dollar selling by banks and exporters.
In a see-saw trade at the Interbank Foreign Exchange (Forex) market, the local currency opened strong at 44.09/10 a dollar from yesterday's close of 44.18/19.
In intra-day it touched the 43.85 level, which was last seen in August 29, 2008 when the local unit had hit a high of 43.71.
The rupee concluded the day at 44.08/09. Forex dealers attributed the initial sharp rise in the local currency to sustained dollar selling by exporters and some banks as well as weak dollar overseas.
In the New York market, the US dollar fell against a wide range of currencies yesterday, touching a record low against the Swiss franc and near a recent low versus the Japanese yen, they said.
However, good month-end dollar demand from importers in the later part of the day and weakness in local equities weighed on the rupee, dealers added.
Alpari Financial Services (India) CEO Pramit Brahmbhatt said: "Today rupee climbed to a 35-month high during intra-day trade, taking cues from global markets where dollar traded weak against the major currencies. Indian equity markets closed nearly half a percent lower today which capped the rupee gain."
India Forex Advisors CEO Abhishek Goenka said: "The US dollar trading weak overseas has enhanced the strength in the local unit."
"It must be noted that the rupee in spite of breaking the strong support of 43.98 levels was not able to sustain its gains and closed above 44 levels. This was mainly on the account of a retreat in euro and local stock market," Goenka added.
The dollar index recovered its initial losses and was trading up by 0.17% against a basket of currencies while New York crude was trading below $99 a barrel in European market today.
Meanwhile, the Bombay Stock Exchange benchmark Sensex, after losing 353 points yesterday, closed lower by nearly 86 points or 0.46%.
The rupee premium for the forward dollar ended lower on fresh receivings by exporters. The benchmark six-month forward dollar premium payable in December settled weak at 123-1/2- 125-1/2 paise from 124-1/2-126-1/2 paise yesterday.
Far-forward contracts maturing in June also finished down at 230-1/2-232-1/2 paise from last close of 232-234 paise.
The RBI has fixed the reference rate for the dollar at Rs 43.9485 and the euro at Rs 63.6663.
The rupee recovered against the pound sterling at Rs 72.13/15 from Tuesday's close of Rs 72.46/48 and also bounced back to Rs 63.70/72 per euro from Rs 63.99/64.01 previously.
However, it fell back against the Japanese yen to end at Rs 56.66/68 per 100 yen from last close of Rs 56.58/60.
