The rupee climbed on Monday, extending a rise into a third month on improving outlook for foreign inflows and tailing stronger regional currencies.
Foreign funds have poured USD 2.9 billion into Indian shares over the past five weeks and traders are betting a pick-up in global risk appetite will bolster the investment.
"Overall, dollar inflows momentum looks good," said a dealer at a foreign bank, who expected exporters to also cash in their earnings.
At 10:48 am (0518 GMT), the partially convertible rupee was at 44.08/44.09 per dollar after rising 0.4% last week to 44.185/195.
The rupee, which firmed 1.15% in July, is expected to move in a 43.95-44.07 band on Monday, traders said.
The main stock index rallied more than 1% after US lawmakers struck a deal to avoid a debt default and boosted markets across Asia.
Asian currencies were up with regional stocks rising while gold and the yen dropped as investors cut safety trades after Washington reached the last-minute deal, though the top US credit rating could still be downgraded.
Obama on Sunday announced the deal to raise the US borrowing limit and urged lawmakers to "do the right thing" and approve the proposed agreement to avert a catastrophic default.
Mild dollar demand from oil companies for their scheduled payments and the euro's weakness could slow the rupee's rise, traders said.
The euro was at USD 1.4398, down from USD 1.4449 when the rupee closed closed on Friday. The index of the dollar against six major currencies was at 73.832 points from Friday's 73.709 points.
The one-month onshore forward premium was at 25.50 points from 24 on Friday, while the three-month was at 70.50 points from 72.25 and the one-year was at 232 points from 240.
One-month offshore non-deliverable forward contracts were quoted at 44.19, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 44.2875. The total volume stood at USD 2.33 billion.
