London has overtaken Mumbai, India's financial capital, to become the top trading centre for the domestic currency. The latest triennial survey of currency markets by the Bank for International Settlements showed that while India handles $35 billion in rupee trades each day, London handles $47 billion.

In April, the UK's average daily volumes for rupee soared to $46.8 billion, a five-fold jump in comparison to $8.8 billion in 2016.

Earlier this year, the Reserve Bank of India had established a task force to manage the rupee trade activity overseas as it raised concerns over the forces that determined the value of the currency, increasing volatility.

The central bank has been looking at ways to improve access for overseas investors and offer them more products to push volumes at home.

While the rupee is not physically deliverable outside India, foreign investors can place bets in the currency using non-deliverable forward contracts, allowing investors to view the exchange rate and settle the difference between the agreed rate and the actual price in dollars.

Rupee trading volumes, including spot, outright forwards, foreign-exchange swaps, and other products, have also seen a surge in Singapore, Hong Kong and the US over the three years, according to BIS.

London has strengthened its grip on the overall foreign exchange market in the last three years by increasing its share to 43 percent, up by 6 percent from BIS' last survey.