The rupee rose to its strongest in three months on Monday, buoyed by broad losses in the dollar overseas, while an early rise in domestic shares raised expectations for foreign portfolio inflows. At 10:25 a.m. (0455 GMT), the partially convertible rupee was at 49.16/17 per dollar after climbing to 49.05, its highest since Feb. 17 and stronger than its previous close of 49.285/295. "It has risen tracking the weakness in the dollar overseas, all Asian units are also stronger. The stocks would now be key," a dealer with a foreign bank said. The dollar index fell to its lowest in four months, as investors emboldened by a smaller-than-expected fall in U.S. jobs, diversified into other currencies. Most Asian currencies were also higher against the dollar. Indian shares climbed more than 1 percent, tracking gains in some Asian markets and rising hopes for a recovery in the global economy. The rupee had risen 1.5 percent last week, its eighth rise in the past nine weeks during which the stock market firmed nearly 50 percent from its 2009 lows. Foreign funds bought a net $1.5 billion of shares in April, and added nearly $700 million in the first four days last week, data showed. One-month offshore non-deliverable forward contracts were quoting at 49.16/26, stronger than its onshore spot rate, indicating a bullish near-term outlook for the currency.

Source