The rupee should strengthen on Monday, supported by a rise in regional stock markets and slightly higher Asian peers.

* Strong foreign fund flows into the stock market have been a key factor for the rupee, which posted its best weekly gain in three months last week..

* Foreigners have moved $4.5 billion into Indian shares this month, taking net investment so far in 2010 to $17.4 billion and helping the index gain 14.8 percent.

* At 0258 GMT, the MSCI index of Asian stocks ex-Japan was up 1.02 percent and the Nifty (^NSEI : 6072.85 +54.55) India stock futures traded in Singapore was up 0.75 percent.

* 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.

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