The rupee reversed early gains on Monday weighed by a weak euro and an impending decision on Greek debt deal, which offset the positive push offered by gains in local shares following a strong US non-farm payroll data.
The rupee is expected to track the euro closely for the day, with the Greek bailout deadline just hours away.
At 11:05 a.m., the rupee was at 48.69/70 to the dollar after opening at 48.60, its highest since September 21. It closed at 48.6850/6950 on Friday.
"The rupee should remain in a range due to mixed factors of lower euro and positive stocks. We are waiting for the Greece decision," said Ashtosh Raina, head of foreign exchange trading at HDFC Bank, who expects strong resistance to emerge at 48.60.
Dealers expect the rupee to move in a 48.50-48.80 band during the day.
Greece's coalition members must tell the European Union by noon on Monday whether they accept the painful terms of a new bailout worth 130 billion euros in order to avoid a disorderly default.
The euro was at $1.3082 after falling to $1.3075 in early Asian trade.
"Every weekend there are some uncertainties regarding the euro zone crisis and so the rupee remains rangy at the beginning of the week," said a dealer at a foreign bank.
However, dealers largely expect the rupee to move with an upside bias on robust foreign fund inflows.
Dollar demand from oil companies to meet their payment commitments also added to the rupee's fall, dealers said.
"We expect 48.25 level to be a big support (for the dollar) in the near term," said a dealer at a foreign bank.
The BSE Sensex rose 1% in early Monday trade after a robust US jobs data bolstered global risk appetite and lifted Asian markets.
Data from the US Labor Department showed 243,000 non-farm jobs were created in January, its fastest pace in nine months, pulling the unemployment rate to an unexpected three-year low of 8.3%.
Major stock indexes closed on Friday at highs not seen in months, with the Nasdaq reaching the highest in 11 years, while the dollar rose against the yen as the jump in US job creation fuelled investor optimism.
"The rupee's outlook doesn't look so bleak anymore given the amount of (capital) inflows we have seen in January," the foreign bank dealer said.
Foreign funds have bought around $3 billion of Indian shares and $3.2 billion of debt in this year until Friday, data from the Securities and Exchange Board of India showed.
The Reserve Bank of India marginally eased some restrictions on the limits on net open positions for forex trading. However, the move won't have any impact on the rupee's movement as the relaxation was nominal, dealers said.
One-month offshore non-deliverable forward contracts were at 48.93.
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 at 48.9325, on total volume of $1.2 billion.
