The rupee strengthened on Wednesday, helped by a rise in local share prices and weak overseas dollar as traders awaited a policy decision from the Federal Reserve later in the day.
It ended at 47.05/06 per dollar, off an intraday peak of 46.9750 and about 0.7% stronger than its previous close of 47.40/41.
?Its equity-linked,? said Paresh Nayar, head of foreign exchange and money markets at First Rand Bank.
Higher foreign institutional investor (FII) inflows could push up stock prices and would help rupee appreciate, he added.
BSE index closed 3.29% higher, its biggest rise in more than three-and-a-half months, on the back of the federal government?s assurance that fiscal stimulus would be maintained and a world equities rally.
The Fed is expected to reaffirm its intention to keep US rates at ultra-low levels for a long time to support the economy, even as signs of recovery build up.
Meanwhile, the yields on government securities closed higher amidst apprehensions over the outcome to the FOMC meeting. Participants also took to some profit booking after a bullish market trend observed previous day. The 10-year benchmark paper, 6.90% bond maturing closed at 7.28% as against 7.23% on Tuesday.
The liquidity situation remained easy and the overnight rates were stable. The overnight call rate was seen in the range of 3-3.30%. The amount absorbed under LAF reverse repo operation was noted at Rs 1, 33,295 crore.