The Indian rupee on Monday tracked a sharp rise in local stocks, bouncing back by 27 paise to close at over one-week high of 54.49 against US dollar on news that the government has
delayed the implementation of General Anti-Avoidance Rules (GAAR).
This is the domestic currency's best closing since 54.35 on January 2.
Forex dealers said the rupee's upward movement was aided by a good dose of dollar selling by exporters and some banks, amid a weak dollar overseas.
A fall in
wholesale inflation for December, boosting rate cut hopes, also helped the sentiment.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced a tad higher at 54.75 a dollar from Friday's close of 54.76 and soon touched a low of 54.82.
However, it quickly bounced back to a high of 54.42 before ending at 54.49 - a rise of 27 paise or 0.49 per cent.
"Rupee started appreciating after WPI for the month of December eased to 7.18 per cent. Government's decision to defer GAAR till April 2016, also supported the positive sentiments in the market," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Softer inflation number also brought cheer to market as expectations of rate cut were boosted, treasury officials said.
With GAAR delayed, rupee gained on hopes that fund flows would increase in the financial markets, they added.
Provisional BSE data showed FIIs have pumped in over Rs 600 crore in Indian stocks on Monday. The stock market
benchmark Sensex spurted 242.77 points, or 1.23 per cent.
The dollar index was down by 0.05 per cent against a basket of six major currencies while New York crude oil was quoting above $94 a barrel in Europe on Monday.
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