The rupee regained its dominance after a brief consolidation phase and ended at a fresh 16-month high of 65.36 against the American currency on Monday in the face of dollar unwinding from exporters and banks.

Weak dollar overseas, along with abundant capital inflows, also helped strengthen the local currency. Forex dealers pointed to the recent improvement in sentiment as the impetus for the renewed vigour.

Massive capital inflows on hopes of more reform measures following BJP’s strong showing in the recently-held State elections spurred the rupee’s biggest rally last week since early 2015.