MUMBAI: The victory of the BJP in the recently concluded polls in five states has catapulted the rupee to a stronger position where it has reported its best-ever quarterly performance in nearly eight years.The possibility of fast-paced reforms and greater investments in infrastructure have whetted investor appetite as they look for better yields along with political and financial stability.In fact, the Indian central bank was seen strongly intervening in the currency market over the past one month curbing any wild swings as some state-owned banks were buying dollars in the spot and futures markets.The rupee has strengthened 4.64% to the dollar during the January-March quarter, the steepest single quarter gain since April-June 2009. This comes at a time when the Indonesia and South Korean currencies are losing their sheen. The dollar index, which measures the unit against six other major currencies, fell by about 2.77% from January to March end.ET Intelligence Group data, citing Bloomberg, states the rupee has posted its best first quarter performance since 1975. “Domestic political stability and weakening dollar index have resulted in gains to the rupee's value,“ said Jayesh Mehta, MD, Bank of America Merrill Lynch. “ A surging overseas investment has reflected investor confidence on India's growth story with an emboldened central government seen pushing for fast-paced reforms. Investors are apparently betting big on the government, seen after a long time in this magnitude.“Infra spending would be higher in coming quarters catering to investment opportunities,“ he said.Some large foreign banks in India have rushed to meet their overseas clients in the UK and South East Asia immediately after state elections. Investors are buoyed up and geared for fresh investment, which is now reflecting, they said.“State election victories (for BJP) have sparked off unprecedented bullish sentiment among overseas investors," said Anindya Banerjee, currency analyst, Kotak Securities.“They look convinced about the government's grit to pursue economic reforms after it gained clout in the Rajya Sabha. With this, markets are now ruling out the rupee's fast value erosion as predicted by many a few months ago. FPI fund inflows and liquidity Foreign portfolio investors have net invested Rs 56,261 crore in equities and debt securities in March this year, the largest sum in a single month, shows data from NSDL, a depository .“The central bank has been following a balanced approach in managing the currency in sync with the government's measures aimed at spurring sustainable growth,“ said Brijen Puri, managing director (head of markets), JP Morgan (India).Of late, the central bank may find it difficult to intervene in the spot market amid liquidity rising as high as Rs 3.50-4 lakh crore. Dollar buying will only add to the cash available in the banking system, which is inflationary, a key factor that the central bank has always tried to arrest.Hit for Exporters A strong currency may make India lose its export competitiveness.“Given the strengthening of the rupee in real terms over the past few months, the market expectation is that based on global factors, the pace of appreciation would be slower or the rupee may weaken marginally in the coming few months," said Brijen Puri.Infact, US president Donald Trump , had on many occasion batted for a weak dollar, as this would help US exporters. The 36-currency basket Real Effective Exchange Rate for the rupee shows it overvalued by nearly 4%.The rupee lost 0.27% to the greenback on Monday to close at 65.03. During the day's trading it rose to 64.76.