Mumbai: The rupee closed at 47.69/71 per dollar, up nearly a rupee from its previous close, recording the biggest single-day gain in more than a decade.
The rupee gained the most on a single day when it rose 3.6 per cent against the US dollar on 19 January 1998.

The rupee's rise was helped by heavy dollar sales by a large corporates and the unwinding of long dollar positions by banks.

Dealers attributed the dollar inflows to a large pharmaceutical company.

The domestic currency, which had dropped to a record low of 50.2 last week, today closed at 47.69/71 per dollar, 2 per cent above the previous close of 48.64/65 a dollar.

The rupee's gain also helped to boost sentiment in the stock markets, which saw another rise in shares. Foreign funds bought nearly $500 million of stocks over Friday and Monday.

The BSE Sensex rose 2.8 per cent, gaining for a fifth straight day, ending at its highest close in two weeks, on hopes that cuts in bank lending rates would help cash flows.

 Liquidity conditions were also better, with call rates hovering a little over 7 per cent.

Bond prices, however, dropped as RBI lowered the amount banks need to invest in government bonds (statutory liquidity ratio). The yield on the 8.24 and 10-year sovereign bond climbed 6 bps to end the session at 7.56 per cent.