Exchange Rates Today: Indian Rupee Sees Biggest Daily Gain in 3 Years

Modified: Friday, 29 June 2012 16:27 BST - Written by Minesh Chaudhari

STORY LINK Exchange Rates Today: Indian Rupee Sees Biggest Daily Gain in 3 Years

The Indian Rupee has posted its biggest daily gain for three years today after the Indian government confirmed that it will impose retroactive taxes on foreign investors and the positive news out of the European summit in Brussels calmed market nerves. Despite the gains, the rupee has posted its worst quarter in at least 17 years having first started to tumble to record lows in May.

The country has suffered from slowing growth, poor investment and rising inflation whilst GDP slowed to 5.3%. These worries mixed with the lack of risk appetites because of the Euro crisis weighed heavily on the rupee. So far this year it is the world’s worst performing currency.

The summit revealed plans that the Eurozone nations would take emergency action to lower the borrowing costs of Italy and Spain and that a new supervisory body would be created to regulate the zones banks. The plans are set to be fully implemented by the end of the year marking a first step in a closer fiscal union.

The improved appetite for risk has bolstered several currencies as investors grow more confident. Indian Prime Minister Manmohan Singh has boosted confidence in the Rupee after taking direct control of the country’s finance ministry. Singh is uniquely qualified to do so as he was a former central bank governor before becoming Prime Minister. Investors are hopeful that Singh will implement much needed reforms to India’s economy and tax system.

The rupee settled at 55.6050/6150 as per State Bank of India data, rising 3.1 percent over its previous close. It rose 2.7 percent on the week, its biggest weekly gain in over two and half years. Previously the Rupee had hit a record low of 57.32 against the US Dollar.

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