Rupee moves higher to 56.46 against dollar on EU agreement, GAAR.

The Indian rupee moved higher against the dollar on Friday after the government released draft guidelines for General Anti-Avoidance Rules or GAAR on Thursday. On the global circuit, Euro and stock markets jumped after EU leaders agreed on longer term tighter fiscal unity and reaffirmed commitment to use its bailout funds flexibly.

Indian equities too soared on Friday on the European agreement and clarity over GAAR. The 50-stock BSE Sensex soared over 250 points or 1.5 per cent to firmly climb above the 17,000 mark, while the Nifty index soared above the 5,200 mark, gaining nearly 75 points.

At 10:18, the rupee was at 56.48 to the dollar, 0.55 per cent or 32 paise above Thursday’s close of 56.80 after hitting a day's high of 56.46/$. It had posted its biggest percentage gain in two weeks on Thursday on hopes long-stalled reforms will pick up pace after Prime Minister Manmohan Singh asked officials to chart a revival in the economy and perk up investor confidence.

The RBI has intervened repeatedly after the currency resumed declines to record lows against the dollar, mirroring declines in May. The currency hit it’s lowest ever at 57.32 on Friday.

The rupee has also failed to gain traction despite measures announced by the central bank on India to bolster the currency, including raising the investment limits on government bonds for foreign investors. It had also asked oil companies to get 50 per cent of their dollar needs from state-owned banks.

The Indian currency has now fallen about 7 per cent this year, making it the worst performing currency.

Source : ndtv.com