The report also said there could be a pre-poll rally in all asset classes in the country as investors expect a pro-market BJP government to form the next government.
The rupee ended at a seven-month high of 60.85 yesterday. Today, it opened at 60.65 on higher capital inflows.
"We think recent positive rupee momentum, on the back of a narrowing current account deficit, softer inflation prints, enhanced policy credibility and strong capital inflows, will continue in the near-term," Barclays said.
The local currency also appreciated after the current account deficit narrowed sharply in Q3 to USD 4.2 billion or 0.9 per cent of GDP.
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Quoting a recent Financial Times report, Barclays said: "With opinion polls favouring the BJP-led NDA coalition, which is perceived as market friendly, there could be further pre-election rallies in Indian assets."
Barclay's has revised its one-month dollar/rupee forecast to 59 from 61.
It has also lowered the target on short dollar/rupee trade recommendation to 59 from 60.5 and stop-loss at entry level of 62.5 from 64.
Barclays' believe the current account deficit will continue to adjust and remain within a 'safe' limit at 2.5 per cent in FY14-15 at USD 50 billion.
It further said the international investors have been encouraged by lower rates of inflation, contributing to higher real interest rates and providing a more constructive backdrop for businesses and their investment decisions.
However, it believes the upcoming elections remain a risk for the rupee and so has kept 3, 6 and 12-month dollar/rupee forecasts unchanged at 61.