Mumbai: The Indian rupee appreciated for the second day in a row and ended 13 paise higher at 60.92 against the Greenback following sustained dollar selling by exporters ahead of a decision on US interest rates by Federal Reserve.
A weak dollar overseas also aided the rupee rise while fresh sell-off by foreign funds in domestic stocks capped the currency's gains, forex dealers said.
Dealers added that they are awaiting the outcome of Federal Open Market Committee two-day policy meet, which began yesterday. Consensus expectations are that Fed will keep interest rates low for a while.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced strong at 60.95 a dollar from last close of 61.05. It moved in a narrow range between 60.8750 and 61.03 before settling at 60.92, showing a rise of 13 paise or 0.21 per cent. Yesterday, it had gained 8 paise or 0.13 per cent.
For the seventh straight meeting, the Fed later tonight is expected to taper its bond buying program by USD 10 billion, bringing QE3 down to only USD 15 billion per month, experts said.
Meanwhile, the Indian equity benchmark S&P BSE Sensex today recovered by 138.78 points, or 0.52 per cent, after two days of heavy fall. FPIs/FIIs withdrew USD 120.70 million yesterday, as per Sebi data.
The dollar index was trading down by a mere 0.03 per cent against its major global rivals ahead of Fed outcome.
The Bank of England's (BoE) Monetary Policy Committee voted 7-2 at its September meeting to keep rates on hold and its quantitative-easing program unchanged, according to minutes released on Wednesday.
Pramit Brahmbhatt, Veracity Group CEO, said: "Rupee extended its gain taking cues from strong local equities. Local indices closed up by over half a per cent with the help of price sensitive shares which traded strong on global positive sentiments ahead of the Fed meet. The trading range for the spot rupee is expected to be within 60.60 to 61.40."
US Federal Reserve's two day meeting will come to an end today and the market expects the Fed to keep the interest rate unchanged, said India Forex Advisors.
This compelled the US dollar to trade weak against majority of the overseas currencies, it added.
In forwards market today, premium softened further on continued receipts by exporters.
The benchmark six-month premium payable in February eased to 227-229 paise or 228.5-230.5 paise previously.
Far-forward contracts maturing in August, 2015 also moved down to 480.5-482.5 paise from 482-484 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.9540 and for the euro at 78.9659.
The rupee fell back against the pound to 99.35 from last close of 98.81 99.29 while recovered to 78.93 per euro from 79.03. It firmed up to 56.76 per 100 Japanese yen from 57.00.
