Rupee rebounds on clarity in tax rules

Written by fe Bureau | Mumbai | Updated: Jun 30 2012, 06:29am hrs
After almost four straight months of depreciation, the Indian rupee strengthened on Friday on hopes the government will clarify on all issues pertaining to tax rules soon and that eurozone ministers will arrive at a conclusion on the solution for the debt crisis.

The currency ended 117 paise stronger at 55.63 per dollar after briefly rising past the 56 per dollar mark intraday. Market participants hope that Prime Minister Manmohan Singh, who took additional charge of the finance ministry on Thursday after Pranab Mukherjee stepped out to contest presidential elections, may push through key reforms that have been slowed down under Mukherjee's leadership.

Indeed after Singh took over the ministry on Thursday, the finance ministry released draft guidelines on GAAR in which it said that income accruing only after April 2013 will be taxed.

Foreign investors were waiting for clarity, which is emerging now. Also globally risk aversion has reduced, said a dealer at a foreign bank.

Global risk aversion reduced reflected in the rise of the euro as a statement by finance ministers of the european union allayed fears of a further worsening of the debt crisis.

A statement issued after ministers met at the Euro Summit said that countries would move a single banking supervisor involving the European Central Bank.