The Reserve Bank of India's timely dollar-selling intervention helped the rupee rally smartly against the US currency on Monday after it met with severe early pressure and touched the 46-dollar levels, pulled down by heavy dollar demand due to renewed concerns over the pace of economic reforms.
The rupee closed at 45.50/52 per dollar, a sharp 10 paise gain from last Friday's close of Rs 45.60/62 and a smart rally from Rs 46.02 after the RBI intervened through dollar-sales to calm the volatile interbank foreign exchange market, dealers said.
The forex spot trade was earlier gripped by nervousness because of the possibility of a slowdown in the pace of economic reforms due to the strong stand taken by the Left parties on the divestment issue.
The rupee, however, opened on a firm footing at Rs 45.55/60 per dollar on the back of a weak dollar overseas.
Although, worries over the continuity of the economic reform process was the main factor behind the early sharp rupee setback, surging global crude oil prices also weighed heavily on the rupee value, requiring RBI's direct intervention to arrest the slide of the rupee, dealers said.
Crude oil for June delivery rose as much as 37 cents to $41.75 a barrel in after-hours electronic trading on NYMEX. In London, Brent crude oil futures rose 64 cents to $ 38.50.
RBI today said that it would continue to sell dollars through agent banks in order to augment supply in market or intervene directly to meet any demand/supply imbalances.
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