MUMBAI--The Indian rupee rose to its highest level in more than three months against the U.S. dollar Wednesday, tracking strong gains in the euro.
At 1005 GMT, the dollar was trading at 53.37 rupees, after falling to 53.35 rupees--a level not seen since Oct. 23. The dollar was at 53.76 in late Asian trade Tuesday.
The euro touched a fresh 13-month high of $1.35367 Wednesday.
The rupee benefited also from hopes of more monetary-policy easing by the central bank in 2013 to help boost economic growth which has slowed to its weakest in nearly a decade.
Tuesday, the Reserve Bank of India trimmed its key lending rate by a quarter-percentage point to 7.75%--the first rate cut in nine months--and said "it is critical now to arrest the loss of growth momentum."
The RBI said its policy stance intends to "provide an appropriate interest rate environment to support growth as inflation risks moderate."
Rate cuts are seen as crucial for India to kick-start the investment cycle and revive economic growth. Better economic prospects will help attract capital inflows and support the local currency.
Traders said foreign banks were seen selling the dollar on behalf of their clients, while there may have been some inflows related to a $877 million share sale by Axis Bank Ltd. 532215.BY +1.75%
The share sale, which started Monday, was oversubscribed 3.5 times within 24 hours of its opening, a person involved said Tuesday.
