Indian rupee gains; PM comments spark reform hopes

* PM Singh asks officials to chart roadmap to revive economy
* Analysts say will await for actual measures on ground
* Singh to clarify tax issue within 2-3 weeks-official

By Subhadip Sircar
MUMBAI, June 28 (Reuters) - The Indian rupee posted its
biggest percentage gain in two weeks on Thursday on hopes
long-stalled reforms will pick up pace after Prime Minister
Manmohan Singh asked officials to chart a revival in the economy
and perk up investor confidence.
Singh, who has taken over the finance portfolio after Pranab
Mukherjee's resignation, specifically said the government's
immediate emphasis was to manage its balance of payments.
"It is good for sentiment. Now we have to see what measures
are actually announced going forward," said Agam Gupta, head of
forex, rates and credit trading at Standard Chartered Bank in
Mumbai.
He said that the rupee may remain ranged till announcements
emerge from the European Union summit and any measures are
actually announced by the government.
India's Congress-led coalition, hobbled by pressure from its
key allies, has put many much awaited reforms by foreign
investors like opening up the multi-brand retail sector as well
as the financial services sector on ice.
A move to retroactively tax foreign investors in the budget
was also widely criticised as retrogressive.
Singh will seek within the next two to three weeks to clear
up confusion over tax policy that has rattled investor
confidence in Asia's third-largest economy, a government
official said on Thursday.
Most analysts are now waiting for actual moves on the
ground.
"In the near term this is not going to be a factor, but any
structural reforms to address India's current and fiscal
deficits are necessary to support the rupee," said Sacha
Tihanyi, senior currency strategist at Scotia Bank in Hong Kong.
Global sentiments continued to remain cautious with the euro
falling to a three-week low against the dollar on expectations
that the EU summit will do little to address the region's debt
crisis.
The rupee settled at 56.80/81, compared to Wednesday's close
of 57.15/16. It gained 0.6 percent earlier in session, its
biggest gain since June 15.
One-month offshore non-deliverable forward contracts
were quoted at 57.22.
In the currency futures market, the most traded
near-month dollar-rupee contracts on the National Stock
Exchange, the United Stock Exchange and the MCX-SX all ended at
57.08. The total volume was at $3.5 billion.

(Editing by Anand Basu)