Mumbai: The rupee strengthened to close below 70 to the dollar, at an over three-month high, tracking gains in Asian currencies after comments by Federal Reserve Chairman Jerome Powell were seen as a signal policy makers may pause their interest rate tightening cycle next year.

The home currency ended at 69.85 a dollar -- a level last seen on 21 August, up 1.1% from its Wednesday’s close of 70.62. The currency opened at 70.17 a dollar, and touched a high of 69.78.

In November, the rupee has surged 5.88%, its biggest monthly gain since January 2012.

Overnight, Powell said the Fed’s series of rate increases had brought policy to “just below" the range of estimates of neutral. The comments spurred gains in US stocks and pushed down the dollar. Minutes of the FOMC’s last meeting, to be released later on Thursday, may provide more clarity on the future rate path.

“This was seen as a signal that the Fed is probably close to the end of the tightening cycle. Notably, this statement was in sharp contrast to the earlier statement around the last FOMC meeting that there was still a “long way" for the Fed to tread before the right levels are attained," said Joseph Thomas, head of research at Emkay Wealth Management.

The recent drop in crude oil prices eased fiscal slippage and higher inflation also aided sentiment among traders. Brent crude has corrected over 30% from its 2018 high of $86.27 per barrel on 3 October. It is also down 8.75% in October.

Traders are cautious ahead of gross domestic product data for the quarter due on Friday. According to Bloomberg estimates, GDP growth will be 7.5% in the September quarter, against 8.2% a quarter ago.

Bond yields fell further to hit a fresh seven-month low. The 10-year government bond yield stood at 7.608% from its previous close of 7.643%. Bond yields and prices move in opposite directions.

The benchmark Sensex rose 1.27% or 453.46 points to 36,170.41 points. Year to date, it has risen 6.21%.

So far this year, the rupee has declined 8.55%, while foreign investors have sold $5.20 billion and $7.62 billion in the equity and debt markets, respectively.

Asian currencies were trading higher. The Indonesian rupiah was up 0.98%, South Korean won 0.4%, Philippine peso 0.27%, Japanese yen 0.27%, Taiwan dollar 0.19%, Malaysian ringgit 0.17%, China renminbi 0.16%, Singapore dollar 0.07%.

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