Despite a heavy battering, the Indian rupee today made a smart recovery to close at 63.25 after hitting a fresh low of 64.13 against the US dollar, helped by massive intervention by RBI.
At the Interbank Foreign Exchange (Forex) market, the domestic currency commenced sharply weak at 63.75 a dollar from overnight close of 63.13. It sank below 64-mark to historic low of 64.13 on sluggish local stocks and continued dollar demand from importers.
However, the rupee later recovered smartly on dollar selling by RBI and exporters. It touched the day's high of 63.15, before settling at a closing low of 63.25, a fall of 12 paise over yesterday's close.
"The RBI was seen selling dollars via state-run banks around the 64.00 levels which helped rupee to trade stable and recover slightly," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).
With the rupee breaching the 64 to a dollar mark intra-day, Finance Minister P. Chidambaram today held a meeting with top government functionaries, including Prime Minister's key economic advisor C Rangarajan.
Chidambaram, who met top officials for the second day in succession today, may have also discussed the reform measures the government plans to take in the near future and steps that will bring back the economy to high growth path.
To restrict the outflow of foreign currency, RBI had on August 14 announced stern measures, including curbs on Indian firms investing abroad and on outward remittances by resident Indians.
"Concentrated measures and efforts by the RBI are likely to show an impact in the long run but in the short-term, the rupee is expected to witness a bearish ride," said Dinesh Thakkar, Chairman & Managing Director, Angel Broking.
Meanwhile, forward dollar premiums dropped sharply on fresh receipts by exporters.
The benchmark six-month forward dollar premium payable in January tumbled to 251-254 paise from Monday's close of 270-273 paise. Far-forward contracts maturing in July also plunged to 475-479 paise from 521-525 paise.
The RBI fixed the reference rate for the dollar at 63.7335 and for the euro at 85.0698.
The rupee continued its downslide against the pound sterling and closed at 99.04