The rupee which had hit an all-time low of 54.30 on December 15, 2011, has now recovered by 9.18 per cent in the last one-and-half months. Reserve Bank of India Governor D Subbarao had on Tuesday said that the curbs that the central bank has put in place to prevent speculation in the forex market may not be temporary in nature. Sustained dollar selling by exporters amid weakness in the US currency’s value overseas also boosted the rupee sentiment.

A weak dollar overseas also aided the rupee. The Japanese yen was on track to post its biggest daily gain in a month against the dollar, recouping most losses made earlier this week as hedge funds bought the currency, while the euro consolidated awaiting a breakthrough in Greek debt talks.

The market developments in Greece would provide directional cues and influence dollar inflows into India, traders said.

The Reserve Bank of India is likely to intervene in the forward foreign exchange market, in addition to the spot market, to help manage liquidity in the banking system.