The rupee rose to a five-week high on Tuesday to strengthen at 78 levels, forcing the central bank to change tack and buy dollars to prevent an appreciation. The rebound occurred even as the finance minister Nirmala Sitharaman asserted that there was no collapse of the rupee and that it was finding its natural level. The rupee ended the day at 78.72, up 31 paise from its previous close of 79.03 after touching a high of 78.49 in the interbank foreign exchange market. Dealers said that the sharp rally triggered the stop-loss set by exporters and caused further dollar sales. Today was a good day for the rupee with a huge selloff in the overseas non-deliverable forward (NDF) market,” said K N Dey of United Financial Consultants. He added that the RBI was unlikely to allow the rupee to appreciate, given the current account deficit and the high level of imports. “The rupee is likely to remain range-bound between 78.50 and 79.50, with a possibility of a breakout to 80 if China-Taiwan tensions escalate. Also, bond yields have come off in the market, in line with the dip in US bond yields. A 75-basis-point hike (100bps = 1 percentage point) by the US Fed in September no longer looks certain,” said Dey.