The rupee gained for the second day, adding 32 paise to close at a fresh two-month high of 61.07 against the dollar amid a rise in local equities and sustained capital inflows.
The RBI recently met with a handful of foreign banks and asked them to stop acting as market-makers for rupee NDFs, according to three bankers involved in the discussions.
Banks and exporters preferred to reduce their dollar position in view of its weakness.
The battered rupee gained 225 paise to 66.55 against the dollar today, the most in at least 15 years, after the Reserve Bank of India eased pressure in the currency market by starting a facility for state-run oil refiners to buy foreign exchange.
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The local currency opened at 62.20 a dollar from the previous close of 61.93 and immediately touched a low of 62.29 at the interbank foreign exchange market.
After a day's respite, the rupee on Wednesday fell by 29 paise, its biggest single day fall in a week, to end at 56.73 today due to heavy dollar demand from importers amid renewed concerns over withdrawal of US monetary stimulus.
Rs 1,000 now buys $13.5 against $14 a year ago.
Month end dollar demand from oil importers has forced rupee to trade weak.
India's record current account deficit has been a key reason behind why Standard & Poor's and Fitch Ratings cut their outlooks on the country's sovereign rating to 'negative' last year.
Increased demand from oil importers for the American currency and a weak opening in the domestic stock market also put pressure on the rupee.
Clamping down on the delays in repatriating foreign exchange earnings, the Reserve Bank of India (RBI) has tightened norms for special economic zones (SEZs), asking them to realise and bring back full value of goods and services to India within a year from the date of export.
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