The rupee gained 91 paise to 59.70 against the dollar in the opening session on Tuesday versus the previous close of 60.61 amid a recovery in the domestic equity market.
The unit had touched an all-time low of 61.19 against the dollar yesterday amid weaker equity market and heavy dollar demand from banks and importers. It further fell as the American currency strengthened against other foreign currencies.
The domestic unit, however, recovered to close at an intra-day high of 60.61 on Monday per dollar after intervention by the Reserve Bank of India. The RBI intervention helped the rupee recover from its intra-day low.
Ban on propreitary trading
To control the rupee fall, the Reserve Bank of India, in a notification issued late on Monday, had banned banks from proprietary trading in domestic currency futures and the exchange-traded options market.
Dollar-rupee forward trade
In a separate order, the Securities and Exchange Board of India (SEBI) has increased the margin requirement on the domestic dollar-rupee forward trade to 100 per cent of the traded amount, which means investors will have to shore up the full amount of the transaction at the time of the trade itself and not during settlement.
It has also imposed fresh restrictions on open interest on USD-INR trade.
"All these measures are expected to stop the speculative positions on USD-INR, which are seen to prompt the rupee to have gap up moves. The fear of reduction in the supply of cheap dollar funds has already done a huge damage to the local currency," said Abhishek Goenka, Founder, CEO, India Forex Advisors.
The intra-day range for the day is seen at 59.75-60.40 levels, Goenka said.
