Snapping a two-day fall, the rupee opened strong at 59.49 a dollar from the previous close of 59.76 at the Interbank Foreign Exchange Market and then touched a low of 59.59.
Later, it rebounded to a high of 59.01 before closing at 59.13, a rise of 63 paise or 1.05 per cent.
The Reserve Bank of India on Wednesday announced more measures to squeeze liquidity from the banking system.
It limited access to borrowed funds by reducing the liquidity adjustment facility for each bank from to 0.5 per cent of net demand and time liabilities from 1 per cent.
The RBI also asked banks to maintain a higher average cash reserve ratio of 99 per cent of the requirement daily as against 70 per cent earlier.
"The gains in the currency are mainly attributed to the recent measures announced by the central bank," said Abhishek Goenka, founder &
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