The rupee snapped two days of losses and bounced back by 47 paise to close at 60.14 against the dollar after the RBI and SEBI took steps to curb speculative trade in currency derivatives.
The rupee commenced at 59.70 a dollar from the previous close of 60.61 on the Interbank Foreign Exchange market and improved to a high of 59.60 on fresh dollar selling by exporters and the steps taken by the regulators.
It then fell to the day’s low of 60.48 before recovering to settle at 60.14, a rise of 47 paise or 0.78 per cent.
On Monday, rupee dived to all-time low of 61.21 but partially recovered on RBI intervention.
After the markets closed, RBI asked oil firms to buy dollars from a single bank to curb bunched up demand. IOC, HPCL and BPCL are the biggest buyers of dollars in domestic market with USD 8-8.5 billion of monthly purchases.
The Securities and Exchange Board of India (SEBI), in consultation with the Reserve Bank of India, last night tightened exposure norms for currency derivatives to check large-scale speculation. It cut the exposure that brokers and their clients can take on currency derivatives and also doubled their margins on dollar-rupee contracts.
The RBI also imposed curbs on banks with regard to trading in currency futures and options with immediate effect. Under the new norms, banks have been barred from trading in currency futures and exchange-traded currency options market on their own. They will be allowed to trade on behalf of clients.
Keen to boost manufacturing and exports, government on Tuesday decided to enhance steel production capacity to 300 million tonnes and raise textile exports by 30 per cent this year. A meeting chaired by Prime Minister Manmohan Singh also decided to give a push towards creating domestic manufacturing capabilities in advanced materials, alloys and composites, sources said.
Meanwhile, the Sensex gained 114.71 points, or 0.59 per cent. Net purchases by FIIs were Rs 165.61 crore, according to the BSE website.
The dollar index was up by 0.12 per cent against a basket of six major global currencies.
The premium for forward dollars closed steady to weak on stray receipts by exporters.
The benchmark sixmonth forward dollar premium payable in December ended at its overnight level of 169-1/2-171-1/2 paise, while far-forward contracts maturing in June edged down further to 345-1/2-347-1/2 paise from 346-348 paise.
The RBI fixed the reference rate for the US dollar at 60.0745 and for the euro at 77.4330.
The rupee rebounded against the pound sterling to 89.43 from the previous close of 90.31 and recouped against the euro to 77.39 from 77.82.
However, it remained firm against the Japanese yen to end at 59.49 per 100 yen from the last close of 59.90.