The rupee ended flat on Friday as gains from foreign fund inflows were negated by strong demand for dollars from oil importers.
Traders ruled out near-term sharp volatility in the rupee, and said the unit is likely to remain largely rangebound with some upward bias.
"Oil bids are being compensated with some inflows. We see that trend continuing," said Uday Bhatt, senior manager of dealing at state-run UCO Bank.
The rupee closed at 49.27/28 to the dollar, compared with 49.29/30 on Wednesday, after moving in a 49.1550 to 49.3500 band. The market was closed on Thursday and will remain shut for a local holiday on Monday.
The rupee gained 0.3% during the week, after weakening in the previous week.
"We could see the rupee gaining strength further, but expect some resistance around 48.70/80 levels," said Hari Chandramgathan, a forex dealer with Federal Bank in Mumbai.
Importers and oil companies are likely to step up dollar buying, if the rupee strengthens past 49, he said, which could cap gains.
Oil is India's largest import item and oil refiners are the largest buyers of dollars in the local market.
On Friday, oil steadied near $120, supported by hopes for a long-awaited Greek bailout deal and tension between OPEC producer Iran and the West.
Indian shares rose 0.8% to record their seventh straight weekly rise, their best run in nearly two years, bolstered by strong foreign fund inflows.
Foreign funds have invested about $8.2 billion in Indian equities and debt so far this year.
One-month offshore non-deliverable forward contracts were at 49.63.
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 all ended around 49.4, on total volume of $3.4 billion.
