The Indian rupee on Friday settled 48 paise higher at 76.39 against the US dollar, rebounding from an all-time low hit a day earlier, buoyed by RBI measures to prop up the economy reeling under the Covid-19 impact.
A strong rally in domestic equities also helped in improving forex market sentiment.
At the interbank foreign exchange, the rupee opened at 76.59 and then gained further ground to touch a high of 76.35 against the US dollar.
The domestic unit finally settled for the day at 76.39 against the US dollar, registering a rise of 48 paise over its previous close.
On weekly basis, the Indian unit lost 12 paise or 0.15 per cent against the USD.
On Thursday, the rupee had settled at an all-time low of 76.87 against the US dollar.
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In a much anticipated move, the RBI announced a slew of measures to infuse liquidity in the financial system including a cut in the reverse repo rate, Rs 50,000-crore targeted long-term repo operations (TLTRO) and refinancing facilities for Nabard, Sidbi and NHB.
Forex traders said these measures announced by Reserve Bank Governor Shaktikanta Das would provide the much needed liquidity and ease the financial stress caused by the pandemic.
The central bank reduced the reverse repo rate - the rate at which banks park their fund with the central bank - by 25 basis points to 3.75 per cent.
This will encourage banks to lend to the productive sectors of the economy.
With regard to other measures, Das said the RBI will begin with giving an additional Rs 50,000 crore through targeted long-term repo operation (TLTRO) to be undertaken in tranches.
Besides, he announced a re-financing window of Rs 50,000 crore for financial institutions like Nabard, National Housing Bank and Sidbi.
Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, said, "Rupee traded stronger today on back of Reserve bank of India announcing liquidity measures to boost growth amid slowdown due to Covid-19 lockdown".
The number of cases around the world linked to the new coronavirus has touched nearly 22 lakh. In India, over 13,300 coronavirus cases have been reported so far.
On the equity market front, the BSE Sensex closed 3.22 per cent or 986 points higher at 31,589, while the 50-share Nifty advanced 3.05 per cent or 274 points to close at 9,267. Nearly Rs 3 lakh crore were added to the market capitalization of BSE-listed companies.
Brent crude futures, the global oil benchmark, rose 0.29 per cent to USD 27.90 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies was trading 0.05 per cent higher at 100.07.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 76.7408 and for rupee/euro at 83.6541. The reference rate for rupee/British pound was fixed at 95.9853 and for rupee/100 Japanese yen at 71.22.
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