The rupee rose toward a seven-week high on speculation the government will announce plans to rein in budget deficit by selling state assets.
The rupee was also supported as the Dollar Index, which tracks the greenback against the currencies of six major US trading partners, headed for its lowest close in three weeks.
?Optimism about the budget continues to provide some support for the rupee,? Mumbai-based Bhatt said. ?The dollar?s decline globally is also helping the rupee.?
The rupee strengthened 0.3% to 45.1325. It declined 0.6 % on Wednesday on concern surging oil prices will boost the nation?s import bill.
The government bond yields and swap rates inched up on Wednesday as some profit-taking creeped in ahead of the weekly food and fuel price data due on Thursday, with the federal Budget on February 28 likely to be the next trigger. The yields on the most-traded 8.13% 2022 bond and the second most-traded 8.08% 2022 bond both edged up 2 bps each to 8.10% and 8.13%, respectively.
However, the illiquid benchmark 10-year bond yield eased 1 bps to 8.05%.
The one-year swap closed steady at 7.46%, while the benchmark five-year swap rate rose 4 basis point to 8.07 percent.