Mumbai: In line with equity market, the rupee on Tuesday ended higher by nine paise to close at 65.96 against the US currency on persistent selling of dollars by banks and exporters amid sustained capital inflows.
Weakness of dollar in the overseas market also affected the market sentiment.
The rupee resumed sharply lower at 66.33 per dollar against yesterday's close of 66.05 at the Interbank Foreign Exchange market and dropped further to 66.41 on initial month-end dollar demand from importers.
However, it recovered afterwards to 65.92 due to rise in equity market before finishing at 65.96 per dollar, showing a gain of 0.09 paise or 0.14 percent.
The rupee has gained by 20 paise or 0.30 percent in two days.
The US dollar weakened against the yen today as investors moved into haven assets amid a sell-off in stocks and industrial commodities like oil and copper. The dollar also lost ground to the euro after official data showed pending US home sales fell to a five-month low in August.
The dollar index currently trading lower by 0.03 percent against a basket of six currencies.
Meanwhile, the S&P BSE benchmark sensex failed to maintain mid-session gains on the back of lower global cues despite steeper-than-expected rate cut by the Reserve Bank of India (RBI) by 0.50 percent after its fourth bi-monthly monetary policy review for the year 2015-16.
The Indian benchmark BSE Sensex ended up by 161.82 points or 0.63 percent.
In forward market today, premium for dollar eased further on sustained receivings from exporters.
The benchmark six-month premium payable in February fell further to 175-177 paise from the last weekend's level of 179-181 paise and for forward August 2016 also moved down further to 386.5-388.5 paise from 394-396 paise.
The RBI fixed the reference rate for the dollar at 66.1843 and for the Euro at 74.6096.
The rupee gained further against the pound sterling to end at 100.00 from yesterday's level of 100.32, but went down to 74.03 against the euro from 73.80.
The rupee also softened against the Japanese currency to 55.03 per 100 yen from 55.00.
