Strengthening for the third day in a row, the rupee onThursday shot up by 42 paise against the dollar to end at 54-level for thefirst time in nearly three weeks, amid sustained FII inflows and a surpriserate cut by China.
The rupee commenced higher at 55.14 a dollar from theovernight close of 55.36 at the Interbank Foreign Exchange (Forex) market, andimmediately touched a low of 55.30 on some dollar demand from oil importers ascrude oil hovered around the USD 85 per barrel.
However, the currency bounced back to breach 55-mark to ahigh of 54.92 before concluding at 54.94, its highest closing since May 18.This was rise of 0.76 per cent or 42 paise.
In the last three sessions, the rupee has gained 71 paise ata time local stocks, represented by Sensex, rose over 600 points with the30-share index rising by 195 points today.
Apart from Foreign Institutional Investors (FIIs) buyingshares worth over Rs 675 crore today, forex dealers said the rate cut in Chinain late trade further boosted a revival in global risk-taking sentiment.
The euro hit a 10-day high of USD 1.2601 against the dollarand the Australian dollar rose to new three-week high of USD 0.9993 afterChina's central bank unexpectedly cut benchmark one-year lending rate by 25 bpsto 6.31 per cent.
The deposit rate was also lowered by 25 bps to 3.25 percent.
The rate cut by China helped the rupee, said Hemal Doshi,Chief Currency Strategist, Geojit Comtrade.
"Factors like euro strengthening against dollar and FIIsbuying shares have contributed to the appreciation of rupee," said T SSrinivasan, GM (Treasury), Indian Overseas Bank.
Expectations of more easing from Federal Reserve weakenedthe dollar as it down 0.3 per cent against a basket of currencies.