Mumbai, Dec 1: The rupee rose to nearly two-week high of 51.46/47 against the US dollar by gaining a smart 74 paise, buoyed by the rally in local stocks and expectations of more capital inflows.
The last time the local currency made a similar big gain was on on October 28, 2011 when jumped by 74 paise.
Fresh dollar selling by exporters on expectations of fall in dollar's value overseas too boosted the rupee sentiment, forex dealers said.
They said that dollar inflows into the government's debt instrument in yesterday's auction by the central bank too aided the rupee surge. However, dollar demand from oil importers restricted the rupee's gain, dealers added.
At the Interbank Foreign Exchange (Forex) market, the rupee opened strong at 51.84/85 a dollar. It further improved continuously in line with strong local equities.
It touched a a high of 51.40 before closing at 51.46/47, up 1.42 per cent.
Meanwhile, the BSE benchmark index, Sensex, surged by nearly 360 points, or 2.23 per cent to end the day at two-week high of 16,483.45.
After removing over USD 1.25 billion in last straight 11 sessions, FIIs pumped in USD 26.80 million yesterday, as per Securities Exchange Board of India's data.
On the other hand, food inflation dipped to 8 per cent for the week ended November 19 from 9.01 per cent last week.
The rupee premium for the forward dollar improved further on sustained paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in may ended strong at 114-116 paise from 105-107 paise yesterday and far-forward contracts maturing in November also concluded remarkably higher at 185-187 paise from 164-166 paise previously.
The Reserve Bank has fixed the reference rate for the US dollar at Rs 51.6520 and for the euro at Rs 69.5086.
The rupee snapped its losing streak and recovered smartly against the pound sterling to finish at Rs 80.82/84 from Wednesday's close of Rs 81.59/61 while strengthened to Rs 69.34/36 per euro from 69.56/58 previously.
It also improved further against the Japanese yen to Rs 66.25/27 per 100 yen from last close of Rs 66.94/96.