The rupee posted its biggest single-day gain in more than a decade on Tuesday, driven by another rise in shares, heavy dollar sales by a large corporate, and the unwinding of long dollar positions by banks.
The partially convertible rupee closed at 47.69/71 per dollar, 2% stronger than 48.64/65 at Monday's close. Last week, the rupee had dropped to a record low of 50.29.
It was the biggest single-day gain for the rupee since Jan. 19, 1998, when the rupee had risen 3.6% after the central bank had taken a number of steps including a hikes in the cash reserve ratio, repo rate and bank rate.
Foreign funds bought nearly $500 million of stocks over Friday and Monday. They have sold a net $12.6 billion worth of Indian shares so far in 2008, helping push the rupee down more than 17 percent. They bought a record $17.4 billion in 2007, when the rupee rose 12.3 percent.
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