The rupee on Friday rose 120 paise, or 3.1%, to 55.60 against the US dollar in morning trade, its biggest daily gain in three years, on robust capital inflows amid clarity on tax-avoidance rules and steps unveiled by European leaders to support the region’s financial system. The Indian currency finally ended up 119 paise, or 2.1% at 55.61.
“The rupee appreciated as there was not much of demand for dollars coupled with selling of greenback from foreign banks,” said NS Venkatesh, head of treasury, IDBI Bank. “The Prime Minister’s statement regarding revival of animal spirit in economy sustained the sentiment.”
With FIIs pumping over Rs 3,000 crore in the market, the huge dollar supply boosted the rupee’s value against the dollar.
Experts said that going forward the rupee will move in tandem with news coming on global and domestic front. “I will wait for more clarity on the euro measures,” said Abhishek Goenka, chief executive at India Forex Advisors. “The dollar-rupee broke a very important support at 56 and if it sustains below that, we can see a further fall.”