The rupee retraced to 61 per dollar on Monday following large dollar-inflows from foreign institutional investors (FIIs).
The rupee appreciated for the fourth straight session and closed at 61.14 to the greenback, 28 paise higher than the previous close of 61.42.
The rupee opened stronger at 60.86 and went on to trade between 60.85 and 61.21 per dollar on Monday. FIIs bought Indian equities worth Rs2,473 crore, the highest in about three months.
A globally weaker greenback also supported rupee gains. The dollar index, as measured against six major currencies of the world, was trading at levels around 80.17 from Friday’s close of 80.32.
Forex traders said that the Reserve Bank of India (RBI) could have bought dollars from the spot market on Monday in order to rebuild its foreign exchange reserves.
According to RBI data, India’s foreign exchange reserves were at $291 billion as on November 29, higher by $5 billion compared to last week. The levels are still lower by $3.2 billion from same period last year.
Dollar demand from public sector banks on behalf of oil marketing companies (OMCs) also capped rupee gains. Last week, the RBI said it had shut the special window for three large OMCs.