As the global sentiment improved on the Euro issue, the rupee gained 3.1 per cent against the dollar on Friday compared to its previous close.
The rupee closed at 55.61 compared to its previous close of 56.80. On Thursday, it gained 35 paise to close at 56.80. It rose by 2.7 per cent in a week, its biggest weekly gain in over two-and-a-half years.
The Government’s announcement that it will not impose any retrospective taxes on foreign institutional investors has improved the sentiment on stock markets as well as the forex market.
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In a first step towards forming European Banking Union, the European Union leaders have agreed to bring down Italy's and Spain's spiralling borrowing costs and to create a single supervisory body for Euro zone banks by the end of this year. This decision has curtailed the rush for the dollar by investors who for long were rattled with all bad news emanating from Europe. It has bolstered the sentiment in the foreign exchange market in the country.