The rupee rose 42 paise to close at 51.7 against the US dollar on Thursday, a five-and-a-half-month high, on expectations that the Cabinet will clear the next wave of big-ticket reforms, expected to trigger a rush of capital inflows.
As expected, the government late in the day announced investor-friendly reforms in the insurance and pension sectors.
"The rupee is riding on positive sentiments generated by expectation of more reforms," said Abhishek Goenka, chief executive officer, India Forex Advisors.
Experts, however, do not expect the rupee to continue its rise.
"The rupee is unlikely to stay in the 51-52 range for long because concerns are still there in euro zone," said Goenka.
"Also, on the domestic front we are yet to see the implementation of the measures announced by the government. We expect rupee to trade in the 53-54 range in next three months."