MUMBAI: The rupee appreciated 96 paise, logging its steepest single-day gain in more than six months, to close at 95.75 (provisional) against the US dollar on Monday after the Reserve Bank of India over the weekend stepped in with several measures aimed at bolstering the domestic currency.
Forex traders said the RBI's measures could provide near-term support to the rupee by easing spot-market dollar demand and curbing excessive forex positioning.
However, sustained recovery will depend on crude oil prices, capital flows and global market conditions, they said.
At the interbank foreign exchange market, the rupee opened at 95.61 against the US dollar; in intraday trade, the rupee touched a high of 95.57 and a low of 95.96 against the greenback.
At the end of the trading session on Monday, the rupee closed at 95.75 (provisional), registering a jump of 96 paise over its previous close. Such a steep single-day gain was earlier recorded on April 2, when the local currency ended the session 166 paise higher against the greenback.
On Friday, the rupee appreciated 17 paise to close at 96.71 against the US dollar.
The RBI on Saturday tightened rules governing forex derivatives trades, aiming to curtail speculative bets against the rupee and asked banks to create a 20 per cent reserve for dollar purchases of over USD 2 million.
In another set of measures announced on Saturday on the derivatives front, the RBI said authorised dealers (AD) should not permit users to rebook any foreign exchange derivative contract involving the INR, whether deliverable or non-deliverable, which has been cancelled.
According to experts, the RBI measures, including a dedicated dollar window for oil marketing companies through designated banks and higher costs for certain foreign exchange hedging transactions, are expected to reduce dollar demand in the spot market and curb speculative positions against the rupee.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 102.38, higher by 0.17 per cent.
Brent crude, the global oil benchmark, was trading higher by 0.94 per cent at USD 105.70 per barrel in futures trade.
On the domestic equity market front, Sensex tumbled 547.65 points to settle at 71,924.68, while the Nifty dropped 157.10 points to 22,363.35.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 3,568.90 crore on a net basis on Friday, according to exchange data.
Meanwhile, the Reserve Bank data released on Friday showed India's forex reserves dropped by USD 12.952 billion to USD 734.606 billion during the week ended October 2.
The overall reserves had dropped by USD 18.343 billion to USD 747.557 billion in the previous reporting week ended September 25.