The sharp gains in the rupee is likely to continue, following the government's ongoing efforts to push the reform process. Strong inflows into the Indian equity markets from foreign funds has also been one of the prime reasons for the sharp rally in the rupee.

The government it may be recalled had initiated a slew of reform measures, beginning with a diesel price hike and FDI in multi-brand retail in September. This has led to strong gains in the rupee following the currency hitting a low of 57.30 last year.

Today's two and half month rally is largely on the government's decision to allow oil marketing companies to hike diesel prices in small amount each month.

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