Re up a whopping 119 paise on gush of dollar flows

The rupee on Friday logged its second biggest gain in nearly a decade of 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 giving clarity to foreign investors, the rupee, tracking robust stock market opening, resumed strong at 56.55 at the Interbank Foreign Exchange market.

With FIIs pumping over Rs 3,000 crore (Rs 30 billion) on Friday 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 Thursday's close of 56.80.

The rupee was the best-performing currency in Asia on Friday.

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 positive outcome of the EU summit which opted ways for long-term solutions to the ongoing Eurozone crisis and the reformative steps taken up by the PM to attract larger dollar inflows kept the rupee on front foot throughout," said Pramit Brahmbhatt, CEO, Alpari Financial Services (India).

Also,

some clarity coming out of GAAR provisions also lifted the sentiment, said N S Venkatesh, Head of Treasury, IDBI Bank.

The rupee's gain comes after 25 per cent slide in one year, which saw it plummetting 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 Euro soared more than 1.2 per cent to a high of $1.2628, its biggest daily rise in eight months.

The yen was also trading stronger at 79.4 per dollar.

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