Mumbai: The rupee strengthened by 17 paise to close at 70.62 against the US currency on Wednesday as global crude oil prices slipped below the $60 per barrel mark amid a smart recovery in domestic equity markets.
Forex dealers said the greenback's weakness against some currencies overseas also aided the domestic unit.
At the Interbank Foreign Exchange (Forex), the rupee opened lower at 70.88, but soon recovered the lost ground and touched a high of 70.58.
The domestic unit, however, pared some gains and settled the day up by 17 paise at 70.62 against the US dollar. The rupee had recovered by 8 paise to close at 70.79 against the dollar on Tuesday.
Forex dealers said bullish trend in the equity market as well as easing crude oil prices also supported the rupee's upward movement.
"The rupee resumed its uptrend ahead of the important G20 meeting scheduled during this weekend. Further move in the Indian currency is also dependent on the crucial data and events like domestic GDP and fiscal deficit, US GDP and FOMC minutes, scheduled on November 30," said V K Sharma, Head PCG and Capital Markets Group, HDFC Securities.
Globally, Brent crude, the international benchmark, was trading 0.53 per cent down at USD 59.89 per barrel.
The BSE Sensex rose for the third straight session Wednesday, gaining over 200 points on short-covering ahead of November derivatives expiry and positive global cues. In similar movement, the broader NSE Nifty reclaimed the 10,700 level.
Meanwhile, on net basis, foreign funds bought shares worth Rs 811.52 crore while DIIs purchased share to the tune of Rs 31.21 crore Tuesday, provisional data showed.
"Speculation may have triggered a currency fall," SBI research said in its report, SBI Ecowrap, adding that "relentless increase in crude prices since July did increase speculative activities in foreign exchange market that may have been avoided through vaguely right/ proactive measures".
The 10-year government bond yield dropped 9 basis points to hit a seven-month low of 7.64 after the Reserve Bank of India announced additional Rs 40,000 crore of open market operation (OMO) purchases in December.
Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.6881 and for rupee/euro at 79.8752. The reference rate for rupee/British pound was fixed at 90.1368 and for rupee/100 Japanese yen was 62.08.