n this rate easing cycle, the terminal rate could reach 5 per cent or a tad lower by the end of FY20: Madhavi Arora.

Rupee closed higher by 0.44 per cent at 70.56 to the US dollar, a level not seen since August 2 when it had ended at 69.60.

Rupee was trading up by 10 paise at 70.78 at 1325 hrs against the dollar which otherwise was ruling high in overseas markets.

Robust buying in domestic equities, fresh foreign fund inflows and easing crude prices also lent support to rupee, forex traders said.

At the interbank foreign exchange, the domestic unit opened weak and shuttled between a high of 70.87 and a low of 71.03 during the day.

Forex traders said investors turned cautious after the US Federal Reserve dimmed hopes of further rate cuts.

However, unabated foreign fund outflows capped the gains, forex traders said.

Elevated crude oil prices have emerged as major fears for India in form of fiscal slippage and inflationary pressure.

Easing crude oil prices and fresh foreign capital inflows provided further support, forex traders said.

Forex traders said the uptick in domestic stocks enthused investors, following which the domestic unit gained strength.