KARACHI (Reuters) The Karachi stock market closed higher on Friday ahead of the budget announcement and amid expectations of an expected removal of a capital gains tax on individual investors. But dealers said volume remained thin as investors remained cautious ahead of the budget announcement. Expectation of favourable announcements for capital market investors kept the sentiment positive despite concerns for rising government borrowing, inflation and lower economic growth, said Ahsan Mehanti, director at Arif Habib Investments. According to media reports, the government may decide to remove the capital gains tax. A 10 percent capital gains tax is imposed on stocks held for six months or less and 7.5 percent on stocks held between 6 months to a year. Officials from the finance ministry have declined to comment. The Karachi Stock Exchanges benchmark 100-share index ended 0.47 percent, or 56.85 points, higher at 12,236.66. Turnover fell to 65.31 million shares from 87.31 million a day earlier. In the currency market, the rupee ended at 85.92/98 to the dollar, little changed from the previous days close of 85.93/98, amid steady dollar demand and supply. The rupee hit a record low of 86.50 last week and dealers said the local unit may face some pressure in days ahead amid increased demand for dollar for import payments and a bleak outlook. The rupee has lost more than 1.5 percent of its value since then, almost the same as its total loss of 1.53 percent in 2010. Dealers said they expected the rupee to trade in the band of 85.80-86.05 in the near term.