The Indian rupee on Monday strengthened by 90 paise to touch a three-month high of 48.50 against the US dollar in early trade on expectations of sustained capital inflows by foreign funds as equity markets may open on a strong note on the outcome of the Lok Sabha polls.

At the Interbank Foreign Exchange (Forex) market, the local unit, which ended 37 paise higher at 49.40/42 a dollar on Friday, moved up by 90 paise as local stocks are expected to rally on the prospects of a stable government after Congress-led UPA's victory in the general elections.