The rupee led gains in Asia after a report that the central bank has asked state-owned oil refiners to route their dollar purchases through a special credit facility.
The currency gained as much as 0.6 per cent to 92.91 per dollar on Friday, its biggest rise in two weeks.
“The news of the RBI asking state refiners to buy dollars using special window instead of in market has led to dollar/rupee opening lower,” Anshul Chandak, head of treasury
at RBL Bank Ltd, told Bloomberg.
“The optimism around the extension of US-Iran talks is also supporting.”
The move follows bold measures taken by the Reserve Bank of India last month to clamp down on bets against the rupee.
The central bank asked lenders to limit their onshore open positions to $100 million and barred them from offering non-deliverable forward contracts to clients.
The rupee had hit successive lows versus the dollar after the Iran war broke out, but has recovered some losses after the RBI stepped in to curb speculation in the currency market.
“The Indian rupee extended its winning streak for a second session, emerging as a top performer among Asian peers.
“The rupee’s ascent was underpinned by steady recovery in the domestic equity and foreign institutional inflows.
“Softening crude oil prices, lower greenback versus the major currencies, a pause in gold imports by bankers, and tapered dollar demand from oil importers further bolstered the local rupee,” said Dilip Parmar, senior research analyst, HDFC Securities.