Rupee gains more as stocks rally

Rupee extends rise to 55.40/4175 from its 55.92/93 close on Monday, on its way to snap a 4-session winning streak, as exporter sell and as domestic stocks rally.

The BSE Sensex gains 1.3 percent to its highest close since mid-March as lenders rally, with sentiment boosted by continued buying from foreign investors.

Euro turns positive against the dollar on reports that German Finance Minister Wolfgang Schaeuble said instruments to tackle the debt crisis could be used without prior announcement, sparking hope bailout funds could be used more flexibly.