* All Asians except yen gain versus U.S. dollar * Early rise in local shares raises hopes for cap inflows * Rupee to track flows, stx in near term - ING Vysya Bank (Updates to mid-morning) MUMBAI, March 23 (Reuters) - The Indian rupee strengthened on Tuesday boosted by early gains in the local sharemarket and the dollar's drop against major currencies and most regional peers. Dealers said the unexpected rate hike by the central bank late on Friday was also underpinning sentiment for the rupee. Last week, the central bank raised rates for the first time since it began cutting in 2008, citing intensifying inflationary pressures and a steady economic recovery. [ID:nSGE62L01X] At 10:15 a.m. (0445 GMT), the partially convertible rupee INR=IN was at 45.50/51 per dollar, 0.2 percent stronger than 45.59/60 at close on Monday, when it dropped to 45.5975, its weakest since March 15. A Reuters poll on Monday found that 18 of 20 economists surveyed expect another increase in both the repo and reverse repo rates on April 20. [ID:nBMA007209]. "Not much impact of the rate hike on the rupee at the moment, except to the extent that stocks have moved, and I guess the short term flows are more material to intraday moves," said R.K. Gurumurthy, head of treasury at ING Vysya Bank. "I see 45.42/45 band supporting the dollar for another move to 45.55 -- it's going to be range play unless see some big moves on global events," he added. Dealers said moves in local shares and the dollar would be watched for cues through the day. Shares rose 0.7 percent early, with Reliance Industries (RELI.BO) and Infosys Technologies (INFY.BO) leading the gains, taking cues from mostly higher Asian markets. [.BO] Foreign fund flows into the stock market are a crucial determinant of the rupee's fortunes. Foreigners have so far in 2010 bought shares worth a net $3.5 billion, adding to record inflows of $17.5 billion seen in 2009. Most Asian currencies were stronger against the dollar on Tuesday. See [EMRG/FRX] for a snapshot. The euro held its ground after rebounding from a three-week low against the dollar, helped by an improvement in risk appetite following gains in U.S. stocks, but still stymied by squabbling over Greece. [USD/] One-month offshore non-deliverable forward contracts PNDF were quoted at 45.59, weaker than the onshore spot rate. In the currency futures market INRFUTURES, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX were both quoting at 45.54, with the total traded volume on the two exchanges at about $910 million. (Reporting by Swati Bhat; Editing by Aradhana Aravindan)

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