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India's rupee posts biggest gain in 15 years on currency intervention

Thursday, 29 Aug 2013 | 7:45 AM ET
Bloomberg | Bloomberg | Getty Images

India's beaten-down currency showed on Thursday that it hasn't given up the fight, staging it's biggest one-day gain for over 15 years on central bank intervention.

The rupee hit a session high of 66.55 at around 1 p.m. London time from a low of 67.84 against the dollar in Thursday's trading session. The one-day surge of around 3.46 percent was the best performance for the rupee since January 1998.

Reuters news agency cited several traders that had seen the central bank shoring up the troubled currency on Thursday. It reported that the Bank had been providing dollars directly to oil firms, as part of attempts at currency intervention.

(Read more: For Indians living abroad, rupee's plunge is great news)

Concerns over the moderation of the U.S. Federal Reserve's bond-buying program have hurt emerging markets across the globe as investors pull money back to the U.S.

India is just one of many countries that relies on these foreign inflows and "taper" fears have caused the currency to plummet against the dollar.

The sell-off has focused attention on India's wide current account deficit, sluggish economy and the slow pace of long-term structural reforms.

Fears about U.S. military intervention in Syria have also fueled risk aversion in global markets, dealing a further blow to emerging market assets, with the latest selling in the rupee coming as Indian stocks have also dipped lower.

(Read more: Indian rupee extends slide to fresh record low)

The rupee is the world's worst performing major currency so far this year, slumping around 24 percent against the dollar. The rupee has fallen 28.4 percent against the euro over the past three months.

Sebastien Galy, a currency strategist at Societe Generale said that some of the pressure on emerging markets was dampening following a series of rate hikes overnight, more FX interventions and a delay on action over Syria. But, he indicated, this might be just a "lull in the storm".

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