The rupee jumped 77 paise to an 11-day closing high of 65.24 against the dollar on Friday and the BSE Sensex rose 290 points to close above 19,000 for the first time since August 14 as dollar sales by exporters and the recent RBI measures lifted investor sentiment.
News of a new $100-billion BRICS fund to support currencies of member countries and a Japanese promise to increase a currency support facility for India from $15 billion to $50 billion also contributed to the upswing.
The rupee has now recovered 5% from the all-time low of 68.85/dollar it hit on August 28 but is still down about 16% in 2013. It touched a high of 65/$ in intra-day trade.
“The (reformist) signals from new RBI governor Raghuram Rajan helped change the sentiment in both the currency and equity markets,” said Dipen Shah, head, private client group, Kotak Securities.