The Indian rupee today gained 63 paise to close at one-year high of 46.88/89 against the US currency on heavy dollar selling by corporates and exporters, prompted by weakness of the greenback in the overseas markets.
Forex dealers said increased capital inflows also boosted the rupee sentiment. They further said that they expect the Reserve Bank intervention to tap the gain of rupee at above 47-level.
They said exporters and corporates heavily sold dollars after the American unit slid further against a basket of currencies in overseas markets following weaker-than-expected US job data. The dollar was under pressure since yesterday.
Dealers said exporters and corporates sold dollars in the spot market and bought them at lower levels at forward markets, thus making profits.
Foreign Institutional Investors continued their buying spree and they picked up shares worth USD 12.7 billion in the current calender year so far, as per market regulator SEBI.
In active trade at the Interbank Foreign Exchange (Forex) market, the domestic currency opened stronger at 47.32/33 a dollar from its previous close of 47.51/52 per dollar and breached the 47-mark to touch a high of 46.89.
It later ended at 46.88/89 a dollar, the level not seen since October 1, 2008 when the rupee closed at 46.62/63 a dollar.
The local unit today gained a whopping 1.34 per cent after rising by 61 paise and rose 1.27 per cent in the last two sessions.
The recovery in the Indian benchmark Sensex by over 92 points or 0.55 per cent too supported the rupee.
The Reserve Bank, however, fixed the reference rate for the US dollar at Rs 47.16 and for the euro at Rs 69.48.
Rupee premiums on the forward dollar recovered on fresh paying pressure from banks and corporates.
The benchmark six-month forward dollar premium payable in March closed up at 67-1/2-69-1/2 paise from 65-1/2-67-1/2 paise on Monday and far-forwards maturing in September also ended higher at 150-152 paise from 146-1/2-148-1/2 paise previously.
In cross-currency trade, the local unit remained firm against the pound sterling and the Japanese yen, while recouped against the euro.
The rupee spurted further against the pound to end at Rs 74.47/49 per pound from its previous close of Rs 75.68/70 and also hardened against the yen to Rs 52.63/65 from Rs 52.85/87 previously.
It, however, bounced back against the euro to Rs 69.04/06 per euro from its last close of Rs 69.42/44.