The rupee snapped its five-day losing streak to close higher by 20 paise at 70.69 against the US dollar on Thursday tracking sharp gains in domestic equities after reports of rollback of a tax surcharge on foreign portfolio investors.
At the interbank foreign exchange, the rupee witnessed high volatility against the US dollar. The local unit opened strong at 70.80 and during the day touched a high of 70.55 and a low of 70.94 against the American currency.
The domestic unit finally settled up by 20 paise at 70.69 against the American currency. The rupee had settled at 70.89 against the US dollar on Wednesday.
Forex dealer attributed the uptick in the local currency to reports of rollback of recently imposed a higher tax on foreign portfolio investors, following which equity markets witnessed a sharp rally.
“This news came in as a big relief for the domestic currency as well as for equity markets. Huge short-covering rally was seen in the domestic equity markets,” said V K Sharma, Head-PCG & Capital Market Strategy, HDFC Securities.
Sharma, however, added that the domestic unit will witness high volatility till official confirmation of the news comes.