Mumbai, Oct 7 (IANS): Increased inflow of foreign funds into government-backed securities propelled the Indian rupee to close at an eight-week high of 64.96 to a US dollar on Wednesday.

The inflows from foreign portfolio investors (FPIs) surged, after the Reserve Bank of India (RBI) on Wednesday notified its decision to give greater access to foreign funds to invest into government-backed bonds.

The rupee gained by 45 paise to close at an eight-week high of 64.96 to a US dollar from its previous close of 65.41 against the greenback.

The rupee was last seen below the 65-level mark on August 12, when it closed at 64.81.

On Wednesday, the RBI notified its decision to give greater access to government backed securities for foreign funds. The RBI's moves are expected to usher in around $2.5 billion by this fiscal end.

On Monday, the Indian rupee to closed at a seven-week high of 65.28, after a key macro data in the US lessened the chances of an October rate hike there. It also caused weakness in the dollar value.

"Rupee bullishness was seen due to exporters selling riskier assets and markets reinvestments," Hiren Sharma, senior vice president, currency advisory at Anand Rathi Financial Services, told IANS.

According to Hemal Doshi, chief currency strategist, Geofin Comtrade, the rupee might weaken in the near term as the "short-term technicals are very oversold".

He estimated a medium term range of around 64.50-70.

The Indian equity markets too continued their upward trajectory for the sixth consecutive session on Wednesday.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE)rose by 103 points or 0.38 percent on Wednesday.

In total, the index has gained 1,418.97 points since September 29, when the Reserve Bank of India (RBI) announced cuts in key lending rates by 50 basis points.