MUMBAI: The rupee extended gains to 55.40/4175 from its 55.92/93 close on Monday, on its way to snap a four-session winning streak, as exporters sold dollars and the markets rallied. The BSE Sensex ended the day up 1.3 percent, its highest close since mid-March with sentiment boosted by continued buying from foreign investors. The euro turned positive against the dollar on reports that German Finance Minister Wolfgang Schaeuble said instruments to tackle the debt crisis could be used without prior announcement, sparking hope that bailout funds could be used more flexibly. Dollar/rupee forward premiums fall Dollar-rupee forward premiums fell on the back of receiving from exporters after the rupee gained in spot market. Spot dollar-rupee was trading at 55.48/49 versus its 55.92/932 close on Monday on exporter selling and as stocks gained on the back of optimism about foreign buying. The near-end three-month premium was trading at 99.25/2510 paise versus 102.00 last close, while 1-year was trading at 317.00/0090 paise versus its last close of 325.75 paise. Paying interest may come if premium falls another 5-7 paise, a dealer said.

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