The rupee today made a smart recovery after yesterday's massive plunge, appreciating by 14 paise to close at 64.74 against the US currency on fresh bouts of dollar selling exporters and banks.
Robust capital inflows largely aided the recovery despite high volatility in domestic equities, a forex dealer said.
The local currency opened firmly higher at 64.80 against Monday's close of 64.88 at the Interbank Foreign Exchange (Forex) Market amid easing dollar pressure.
It gained further ground to hit an intra-day high of 64.69 in late afternoon deals before ending at 64.74, showing a smart rise of 14 paise, or 0.22 per cent.
The rupee yesterday plummeted by a whopping 30 paise to close at an over one-month low of 64.88 against the US dollar.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.8168 and for the euro at 73.5995.
The dollar, however, traded strong overseas against its major rivals amid speculations of Fed rate hike in near term.
Forex trading sentiment also revived and helped the rupee outperform other Asian and emerging market currencies on hopes that the India's new indirect tax regime, GST, will lead to higher foreign direct investment inflows and boost the economy, a forex dealer commented.
Meanwhile, domestic bourses succumbed to profit-taking after a spectacular overnight rally, though losses were capped after a follow-up buying in key energy heavyweights such as Reliance Industries, Bharat Petroleum and ONGC.
On the global front, the US dollar maintained its uptrend against other major currencies following a hawkish shift in Fed policy expectations and priced-in probability of a hike at the September and December meetings of the FOMC.
The dollar index, which tracks the US currency against a basket of six major rivals, was up at 96.00.
In cross-currency trades, the rupee recouped losses against the pound sterling to end at 83.70 from 84.03 per pound and also bounced back against the euro to finish at 73.42 from 73.77 yesterday.
The rupee strengthened against the Japanese yen to settle at 57.21 per 100 yens from 57.40.
In forward market today, premium for dollar turned weak due to good receivings from exporters.
The benchmark six-month premium payable in December edged down to 143.50-145.50 paise from 146-148 paise and the far forward June 2018 contract also declined to 289-291 paise from 293-295 paise.
On the International commodity front, crude prices retreated in early Asian trade, breaking an uninterrupted eight-straight day upsurge as traders closed positions ahead of the US Independence Day holiday and technical resistance.
The Brent crude futures fell 27 cents, or 0.5 per cent, to USD 49.41 per barrel.
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