The rupee strengthened on Friday, helped by gains in local shares and hopes an improvement in global risk sentiment would bolster capital inflows.
Traders said signs that debt-laden Greece has moved closer to averting a default helped investor confidence, but the longer term outlook for the rupee would depend on the annual budget to be presented in parliament next Friday.
At 10:22 am, the rupee was at 49.925/930 to the dollar, 0.7% stronger than its Wednesday's close of 50.28/29. The market was closed on Thursday for a local holiday.
"Expectations of inflows in the stock market with the MCX IPO doing very well is also supporting sentiment for the rupee," said Anil Kumar Bhansali, vice-president at Mecklai Financials.
The Multi-Commodity Exchange of India, which raised Rs 660 crore in an initial public offering, jumped more than 37% on its stock market debut.
The BSE Sensex snapped a three-day fall and rebounded 1.9%, joining a rise across Asian markets.
Traders said the rupee is likely to swing in a wide range, between 49.74 and 50.37, with payments for oil imports a key driver.
"The direction for the rupee will depend on the budget, and also on the global sentiment," a trader with a foreign bank said.
Oil is India's largest import item and refiners are the biggest buyers of dollars in the local forex market. Brent crude rose above $125 a barrel, posting its sixth weekly gain in seven.
Traders will also be wary ahead of the US jobs data due after the local market closes on Friday.
The one-month offshore non-deliverable forward contracts were at 50.36.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 50.16, on a total volume of $970 million.