The rupee recovered sharply on Wednesday as the Reserve Bank of India (RBI) aggressively sold dollars to prevent the currency from falling to a record low amid volatility in global markets over the U.S. push for limited U.S. strikes on Syria.
Traders also cited hopes that Raghuram Rajan,who takes over at the RBI on Wednesday,will bring a new approach to the central bank’s defence of the rupee,which has so far relied on a risky strategy to drain cash and raise short-term interest rates.
The central bank was seen selling dollars consistently when the rupee would approach the record low of 68.86 hit on August 28.
“Whenever the RBI moved out of the market,we saw a sudden uptick in USD/INR and they again came in to sell. They have been very aggressive today,” a senior dealer with a state-run bank said.
The partially convertible rupee was trading at the day’s high of 66.80/81 per dollar at 11:35 a.m. (0605 GMT),stronger than its close of 67.63/64 on Tuesday.