The rupee gained sharply today on renewed hopes of further reforms and strong dollar inflows. The Indian currency was trading higher by 0.31 paise at 54.07 to the dollar at 9.50 am IST. The gains were also on the back of strong equity markets.

The rupee is expected to strengthen as the government lays an ongoing focus on reforms. Also, crude prices have been falling over the week, which is likely to help support the rupee. Bulk of India's dollar demand comes from oil imports.

Today's rally in the rupee can also be attributed to the fact that the government did not withdraw any of the reform measures that it had unleashed over the last few weeks.

It maybe recalled that the government had approved FDI in multi-brand retail and in the aviation sector, which has improved sentiments in the stock markets and for the rupee.

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