Rupee at a high of 54.72 against dollar; up by 71 paise

Mumbai: The rupee gained a hefty 71 paise to trade at two-month high of 54.72 against the dollar in early trade on Friday at the Interbank Foreign Exchange as the American currency weakened against euro overseas.

Dollar selling by exporters and banks amid a strong opening in the domestic equity market also supported the local unit, forex dealers said.

The government's decision to hike diesel prices by Rs 5 per litre on Thursday, which would help bringing down the fiscal deficit, was another positive factor, they said.

Meanwhile, the BSE benchmark index Sensex climbed 406.45 points, or 2.26 per cent, to 18,427.61.

Euro rose against the dollar overseas after the US Federal Reserve announced further monetary easing measures aimed at boosting the world's largest economy.

The rupee had lost 22 paise yesterday to close at 55.43 against the dollar on fresh demand for the American currency from banks and importers.