The rupee on Wednesday climbed 49 paise to 59.65 against the dollar, the most since June 28, after the RBI and Sebi took steps to curb volatility, while banks and exporters sold the US currency which weakened overseas.
Support came from foreign capital inflows into the equity market as overseas investors bought shares, forex dealers said.
The local currency was also helped after the Reserve Bank, aiming to curb volatility in the rupee, ordered state-owned oil companies to purchase their dollar requirements from a single public sector bank.
That followed steps announced by the central bank and capital market regulator Sebi to curb speculation in the currency derivatives market after the rupee dropped to a record low of 61.21 on Monday.
"The recent steps taken by the central bank and a recovery in the euro have helped the rupee to post gains against the US dollar today," said Abhishek Goenka, founder & CEO, India Forex Advisors. "Today's FOMC minutes are the key event for the forex markets."
The rupee resumed higher at 59.99 per dollar from the previous close of 60.14 at the Interbank Foreign Exchange Market and firmed up further to 59.63 before ending at 59.65 per dollar, a gain of 49 paise, or 0.81 per cent.
It moved in a range of 59.63 to 60.21 during the day. The currency has added 96 paise, or 1.58 per cent, in the past two days. On June 28, the rupee had appreciated by 80 paise.
The rupee traded strong, taking cues from a weakening dollar index, which measures the greenback against a basket of six other currencies, said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
The minutes of US Fed's June meeting will signal how long the central bank's asset-purchase program will operate. The USD 85 billion a month bond purchase programme was instrumental in adding liquidity to the financial markets.