Friday, June 29, 2012

Rupee records 2nd biggest gain in 10 years

The rupee today logged its second-biggest gain in nearly a decade up a whopping 119 paise to settle at a two-week high of 55.61 a dollar on robust capital inflows amid clarity on tax-avoidance rules and unexpected steps unveiled by EU to support the region's financial system.

With the Finance Ministry late last night announcing the draft guidelines on the much-feared General Anti-Tax Avoidance Rules (GAAR) giving clarity to foreign investors, the rupee, tracking robust stock market opening, resumed strong at 56.55 at the Interbank Foreign Exchange (Forex) market.
With FIIs pumping over Rs 3,000 crore today in shares, the huge dollar supply vaulted the rupee to a intra-day high of 55.60 before concluding at 55.61, a net rise of 119 paise or 2.10 per cent compared to yesterday's close of 56.80. The rupee was the best-performing currency in Asia today.

The previous two biggest single-day gains since 2003 were 124 paise rise on September 22, 2011 and before that 119 paise jump on November 12, 2008.

The rupee's gain comes after 25 per cent slide in one year , which saw it plummeting to all-time low of 57.3 last week.

Forex traders said a steep fall in the US currency overseas against the euro as well as other major rivals after European Union leaders agreed to employ measures aimed at stabilising Spanish and Italian bond markets and establish a Eurozone-wide banking union also supported rupee's gains.

The premium for the forward dollar moved down further slightly on sustained receivings by exporters.

The RBI fixed the reference rate for the US dollar at 56.3090 and for euro at 70.9080.

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