MUMBAI The Indian rupee posted on Friday its biggest daily gain in two-and-a-half months after the government’s diesel price hike raised hopes for more fiscal reforms. However, the rupee’s session was slightly marred by firm inflation, which dented hopes the Reserve Bank of India would consider cutting interest rates as early as its policy review on Monday. “We had everything going right for the rupee today. But I am not too sure how long this will sustain to be honest,� said Ananth Narayan G, co-head of wholesale banking for South Asia at Standard Chartered Bank. “The steps taken by the government are pretty positive. I think the market is re-rating the possibility of a ratings downgrade now and thinking it will not happen. But it doesn’t take away the basic issues like the lack of growth, infra projects not taking off, etc.�. Narayan said he expects the rupee to trade in a 53.75-55.00 range next week. The partially convertible rupee closed 113 paise higher at 54.30/31 per dollar, gaining 2.1 per cent from its close of 55.43/44 on Thursday to mark its biggest single-day gain since June 29. Traders said gains in the domestic shares also boosted the rupee — which gained 1.9 per cent for the week to mark a second consecutive weekly gain — and fuelled hopes for more foreign fund inflows.

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