Forex dealers said firm local equities, signs of consistent capital inflows and sustained dollar selling by exporters also boosted the rupee sentiment.
The rupee swung between 54.04 and 54.58 during the day at the forex market. However, recovery in stocks after the news of support by Mayawati on FDI issue to the government helped the rupee bounce back and end the day at at 54.14, a rise of 40 paise, or 0.73%. This is the highest level of rupee since November 2 when it had closed at 53.81.
The only major factor that boosted rupee today was BSP's support to the government on allowing FDI in multi-brand retail. Investors cheered the prospects of higher foreign capital inflows on this news," Dhanlaxmi Bank executive vice-president Srinivasa Raghavan said.
FIIs infused $175.41 million in the stock markets on Wednesday, as per Sebi data. The dollar index was down by a mere 0.008% against a basket of six major currencies.