Whoa. Where did the rupee come from? India’s currency is on a surge, and it has made its mark as the top-performing currency for the first quarter of 2010. Rupee exchange traded funds (ETFs) also performed handsomely in the same period.

India has allowed its currency to appreciate over the course of the year, rising more than 17% since the market’s March 9, 2009, lows. Harsh Joshi for The Wall Street Journal reports that many predict the rupee could rise another 3% by years’ end. [Why India Suffers If Currency Falls.]

India’s economy actually benefits from a rising currency, thanks to it being a net importer. A strong rupee equals more purchasing power for the locals. According to The Economic Times, a rising currency renders exporters uncompetitive — but helps importers and attracts foreign portfolio investors who like a strengthening currency. [Factors Influencing the Indian Economy.]

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  • Market Vectors Rupee/USD ETN (NYSEArca: INR)

  • WisdomTree Dreyfus Indian Rupee (NYSEArca: ICN)