Rupee at 4- month high on robust inflows

At 10:43 a.m. (0513 GMT), the partially convertible rupee was at 45.085/095 per dollar after hitting 45.08, which was its highest since May 14, and firmer than 45.25/26 at close on Friday.

Foreigners have pumped $4.5 billion into Indian shares this month, taking net investment so far in 2010 to $17.4 billion. The inflows had lifted the rupee 1.3 percent last week, its best rally in three months.

Vikas Chittiprolu, a senior foreign exchange trader with state-run Andhra Bank, said foreign interest was expected to stay robust with a slew of initial public offerings (IPOs) lined up this week.

Sea TV Network, Bedmutha Industries and Ashoka Buildcon that together aims to raise up to $82 million are among the IPOs lined up this week. State-owned Coal India Ltd, the world's largest coal miner, is expected to hit the market in October to raise up to $3 billion.

"But since it's the month-end, we will see bidding from oil and importers keeping the gains momentum checked," he said.

Oil is India's biggest import and refiners are the largest buyers of dollars in the local currency market with their demand tending to peak at the end of each month when they make payments.

Indian shares climbed more than 1 percent to a fresh 32-month high as economic data in the U.S. bolstered sentiment across Asian markets.

The dollar hovered near five-month lows on the euro and eight-month lows against a basket of currencies on Monday, pausing after steep losses last week and keeping the euro from pushing to new highs above $1.3500.

Most Asian units too rose versus the dollar.

"By and large exporters have not yet hedged beyond 3 months and so technically the market is still not hedged enough. If stocks remain bid, then some day this week, we expect rupee to touch 45," said Hitendra Dave, head of global markets at HSBC India.

One-month offshore non-deliverable forward contracts were quoted at 45.30, weaker than the onshore spot rate.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange were at 45.10, 45.0975 and 45.10 respectively, with the total traded volume on the three exchanges at about $2.2 billion.