Rupee near 10-week high of 54.70/dollar

The rupee continues to trade near two-and-half-month high at 54.70/71, versus its previous close of 55.43/44, after the Fed announced new monetary stimulus and after India raised diesel prices, signalling a resolve to tackle fiscal reforms.

The diesel price increase, though inflationary, would help shrink the government's fiscal deficit burden and attract foreign fund inflows into the country, traders say.

The pair dropped to as low as 54.64 earlier in the session, its weakest since July 4.

Hefty gains in domestic shares also helping the rupee.

Traders see good support for the pair around 54.55 and good resistance around 54.85.