Rupee rebounds 135 paise to close at 63.20 as RBI sells dollar

The beaten-down rupee bounced back with a 135 paise (or 2.1 per cent) gain and closed at 63.20 against the US dollar on Friday, helped by RBI intervention in the inter-bank foreign exchange market and gains in the stock market.

Today's gain is the second-biggest for the rupee in a decade considering the all-time of 65.56 against the dollar hit on Thursday. The Indian currency had flared up by 152 paise on 18 May 2009.

Dealers said state-run banks sold dollar in large quantities, probably on behalf of the Reserve Bank of India, which helped to lift the battered down currency.

The dollar sales at around 4.30 pm when most buyers were out of the market, not only pushed up the spot rupee amid thin trades but also softened rates on the bearish offshore non-deliverable forward (NDF) market.

Meanwhile, finance minister P Chidambaram said he was confident that the government's efforts to curb imports, improve exports and attract greater remittances would help to bridge the current account deficit and help the rupee recover.

Research reports from Barclays and Crisil also point to a softening of the CAD and a recovery of the rupee to levels around 60 to a dollar by end the fiscal year 2013-14.

The RBI, meanwhile purchased G-secs worth Rs6,231.85 crore in today's auction against Rs27,965.46 crore of bids received from the market participants. Yields on the benchmark 10-year bonds were in the range of 8.21 to 8.34 per cent.