Rupee gains biggest gain in 11 years

Tracking the trend in local stocks, the Indian rupee surged stronger by 152 paise or 3.08 per cent to a five-month high of 47.88/89, posting its biggest gain in almost 11 years against the dollar, on hopes of heavy capital inflows, prompted by a clear mandate for the Congress-led UPA in the Lok Sabha elections.

The domestic currency breached the 48 level and touched this level not seen since December 19, 2008.

The Indian benchmark zoomed by 2,110.79 points or 17.34 per cent in response to the emerging political stability in the country after the general elections.

The Interbank Foreign Exchange (forex) market witnessed fairly active trade this morning as the local equity markets hit the upper circuit filter, leading to suspension of trading twice after the election mandate generated euphoric conditions in Indian markets.

The Indian unit moved in a range of 47.75 and 48.65 after resuming with a wide gap of 92 paise at 48.48/52 a dollar from its previous close of 49.40/42 a dollar.

Forex dealers said the exchange market was in an upbeat mood with strong indications of heavy portfolio investments, which analysts estimated at about $50 billion through FDI, ECB and equity.

The government is expected to push forward the reforms agenda paving the way for increased capital inflows, the prime driver for the rupee.