The rupee on Thursday surged past the 70-mark to a three-month high against the dollar, while key stock indices settled at their highest level in two months following dovish comments from the US Federal Reserve amid soft crude prices.

At the inter-bank forex markets, the domestic currency gained a whopping 77 paise to close at 69.85 to the greenback, the first time in three months the unit crossed the 70-mark.

The rupee had come under intense pressure and hit an all-time low of 74.48 to the dollar on October 11 because of multiple factors that included rising crude prices that topped the $85-per-barrel-mark and the heavy outflow of foreign portfolio investment.

However, a steady drop in oil prices (Brent crude is now at $58 per barrel) in recent times has helped the rupee to recover around 6 per cent from its record lows. This has eased concerns about a wider current account deficit (CAD) in the current financial year.

Thursday’s rally in the rupee came after US Federal Reserve chairman Jerome Powell said the central bank’s benchmark interest rate is likely near a “neutral level”. This saw the dollar weakening against some of the other global currencies.

The rupee opened on a firm note at 70.15 against the dollar and breached the crucial 70-mark and rallied to the day’s high of 69.78 following dollar selling by exporters. It later settled at 69.85, a gain of 77 paise over its previous close.

The last time the rupee closed above 70 was on August 24, when it had finished at 69.91.

“The rupee remains firm on account of a sharp decline in crude prices in the international market. This is positive for India as decline in crude prices may push inflation and CAD lower,” said Rushabh Maru — research analyst at Anand Rathi Shares and Stock Brokers.

He added the near term range for the rupee was 69.50 to 71.00 levels.

“The focus will now shift to the second-quarter GDP data, RBI monetary policy meeting next week, Opec meeting and state election results. These data and events will determine the near-term course for the rupee. The RBI has sold its forex reserves sharply in the last couple of months when the rupee was under huge pressure during August to October. Hence this a good opportunity for the RBI to rebuild its reserves. Hence over the medium term once again the rupee may move towards 72-73 levels,’’ Maru said.

It was a good day for stocks as well, as the key indices rose to two-month highs on the comments made by US Federal Reserve chairman Powell. While the 30-share Sensex surged 453.46 points, or 1.27 per cent, to end at 36170.41, the broader NSE Nifty rose 129.85 points, or 1.21 per cent, to 10858.70.

Provisional data from the bourses showed foreign funds bought shares worth Rs 823.47 crore, while the purchase by domestic institutions were at Rs 973.31 crore.

However, the Yes Bank share continued its poor run as it cracked around 9.5 per cent during intra-day trades after Icra downgraded its long-term ratings.