RBI was spotted selling dollars via state-run banks to prevent a sharper fall in the rupee in thin trading conditions, five dealers said on Friday.
The partially convertible rupee was on course to post its biggest daily fall in two weeks tracking weaker global risk assets. However, the central bank sold dollars via state-run banks starting at 55.62 rupees, helping the rupee recover to 55.38/39, traders said.
The pair had closed at 54.94/95 per dollar on Thursday.
"The market has been very illiquid today and even small flows were causing big moves, so the fall was really not justified. So it was only sensible for the RBI to come in," a senior dealer with a private bank said.