Traders said that the central bank intervened heavily in the market selling dollars through large state-owned banks, helping the rupee to touch the intra-day high.
“However there has been underlying demand for dollars. Companies were seen covering their positions and buying dollars at lower levels,” a treasury professional said.
Reserve Bank of India Governor Sanjay Malhotra Wednesday said the Indian currency is undervalued in terms of real effective exchange rate (REER) and the central bank would ensure the unit finds its correct value.
RBI intervenes in the spot market regularly using its forex stockpile to support the rupee which has been among the worst performing Asian currencies losing about 7% this year till date.
The foreign exchange reserves depleted by $46 billion to $734 billion since September 11, according to RBI data.
The market sentiment mildly improved after President Trump said the US would refrain from military action against Iran ahead of the November midterm elections.
