The rupee gained 1.9% to 47.725 per dollar at 5 p.m. to close, which is the biggest gain since Jan. 19, 1998.
Rupee jumped the most in a decade as continued gains in the stock market eased concern that foreign institutional investors will cut their holdings of local shares. The rupee was the biggest gainer among Asian currencies today.
The rupee gained 1.9% to 47.725 per dollar at 5 p.m. to close, which is the biggest gain since Jan. 19, 1998, and the strongest since Oct. 3. The currency has rebounded 4.5% from a record closing low of 49.96 reached on Oct. 24.
Offshore forward contracts show that traders have cut their predictions for the depreciation in the rupee over the next month, showing an implied rate of 48.14 a dollar compared with 49.03 yesterday.
The BSE Sensex climbed for a fifth day, rising as much as 3.2% today. The index has rebounded 25% from a three-year low reached on Oct. 27.
FIIs have invested US$482.1mn in Indian shares in the last two days. Overseas investors have made net sales of local equities worth US$12.4bn this year as against last year's record inflows worth over US$17bn.
The rupee fell earlier today on speculation that importers took advantage of the currency's rally to buy cheaper dollars. India's imports rose 43.3% to US$24.4bn in September from a year earlier, according the government data.
