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The Indian rupee recovered sharply against the US dollar due to the Reserve Bank of India's massive intervention both in the spot and forwards section in a rather active trading at the interbank foreign exchange market on Tuesday.

The RBI has sold about 400 million dollar since Monday and is expected to keep a steady watch on the movement of the rupee-dollar outright dealings, not letting the rupee to fall below a certain level.

The rupee opened on a weaker note at Rs 36.68-71 per dollar compared to Monday's closing of Rs 36.70, and drifted further to Rs 36.70-73 levels. The RBI intervened heavily both in the spot and forwards which arrested the downfall of the rupee and the rupee recovered from its lost grounds to settle down at Rs 36.58-60.

According to a leading forex dealer in the nationalised bank, the rupee opened on a weak note and would have seen a further drop had not the RBI intervened supportively. Secondly, there was not much corporate demand which resulted in the rupee's appreciation.

A dealer said there were few importers in the market and it seems they have stayed away from the market following heavy intervention by the central bank, said a dealer.

The State Bank of India too was reported in the market, buying dollars at Rs 36.57 and 36.60 levels.

Similarly, the forwards too crashed by one per cent over its previous levels amidst the RBI intervention and some receiving pressure. The cash to spot dollar was quoted at 0.50 to 0.75 per cent level for the day.

The forward premiums were quoted at spot/September 15-17, spot/October 40-41, spot/November 61-63, spot/December 88-91, spot/January 109-112, spot/February 128-132 and spot/March 149-153 paise premiums respectively.

On the other hand, the overseas market witnessed a dull trading with the dollar maintaining a well-built against various other European currencies.

Meanwhile, the Reserve Bank of India fixed the reference rate at Rs 36.65 per dollar over its Monday's fix of Rs 36.67, lower by 2 paise.