The Indian rupee rose the most in over two months on Thursday after the government agreed to a vote in parliament on allowing foreign investment in multi-brand retail, raising hopes it would muster a majority and push through key reforms. The rupee, which has been buffeted by concerns of fiscal deficit and a gaping current account gap, found renewed vigour as the government showed spunk and allowed a non-binding vote in parliament on foreign investment in multi-brand retail.
The move raised hopes the opposition would now let parliament function smoothly, allowing the passage of key legislation such as foreign investment in pension and insurance, banking law amendment and other bills. "The feeling is that the UPA (United Progressive Alliance) will do something to get support and that reforms will become a reality," said Subramanian Sharma, director at Greenback Forex, a forex advisory firm.
The partially convertible rupee closed at 54.8350/8450 per dollar, up 1.1 percent, its biggest daily gain since September 21. The rupee hit an intraday high of 54.76, its highest in two weeks, and compared with its previous close of 55.45/46 on Tuesday.
In the offshore non-deliverable forwards market, the one-month contract was at 55.13 while the three-month was at 55.70. In the currency futures market, the most-traded near-term dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 55.08 with a total traded volume at around $6.4 billion.
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