The Indian rupee rose to its higest in more than a month on Wednesday afternoon as gains in domestic shares boosted capital inflow hopes while the dollar's weakness against major currencies also underpinned sentiment.
At 2:40 pm, the partially convertible rupee was at 48.25/26 per dollar, its highest since Aug. 14 and above its previous close of 48.65/66.
Shares rose more than 1 percent, helped by a rise in global markets and as higher advance tax data bolstered hopes for stronger quarterly corporate earnings.
Foreigners have bought shares worth $8.9 billion so far in 2009, after having sold more than a net $13 billion last year.
The dollar index, a gauge of the US unit's performance versus six majors, was down 0.4 percent. Asian units too were trading stronger.
In the currency futures market, the most traded near-month contracts on the National Stock Exchange and MCX-SX were both quoting at 48.4375 each, with the total traded volume on the two exchanges at about $552 million.