The Indian rupee strengthened on Wednesday bouyed by hopes for fresh capital inflows after the stock market snapped a four-day losing streak and climbed 3.3 percent. The partially convertible rupee closed at 48.85/86 per dollar, 0.5 percent stronger than its previous close of 49.11/12. "The rupee gained today as the stocks were positive. There is currently no specific local demand which is influencing the rupee, it is likely to stay in a broad range of 48 to 49.50 for some time," said Naveen Raghuvanshi, an associate vice president with Development Credit Bank. Foreigners have withdrawn about $310 million from Indian shares this year, after dumping more than $13 billion in 2008, but traders hope a rise in share prices will draw in investments. Dealers said they would also be watching the dollar's performance against the euro and other major currencies for direction.

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