At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed slightly lower at 54.73 and immediately touched a low of 54.78 on the back of initial hesitancy in local stocks.
However, a smart recovery in equities after the morning session on account of rise in refinery stocks helped the rupee to bounce back to a one-month high of 54.22, a level not seen since intra-day high of 54.10 on December 13, 2012.
With FIIs supporting the rupee with nearly Rs 600 crore fund infusion in stocks today, the domestic currency closed at 54.39, registering a net rise of 30 paise or 0.55 per cent.
In the previous two days, it had fallen by 20 paise or 0.37 per cent.
"The rupee closed at its two week high against the US dollar after the government announced the deregulation of the diesel prices. This signals that there would be regular hike in the diesel prices," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Meanwhile, the Indian benchmark Sensex spurted by 146.40 points or 0.74 per cent. The dollar index was down by 0.20 per cent against a basket of six major global currencies. (MORE)
