The rupee was largely steady on Friday as rising foreign investment in a buoyant stock market was tempered by the dollar's strength against other major currencies overseas.
"There are mixed cues today so the rupee is largely steady, but the market is short rupee. There has been too much of dollar selling in the past few days; that should correct a bit," a senior dealer with a foreign bank said.
At 10:30 am, the partially convertible rupee was at 49.77/78 per dollar, unchanged from its Thursday's close, when it rose to as high as 49.34, its strongest since Feb 17. (ad) The dealer said he expected the unit to trade in a broad 49.65 to 49.95 band.
The dollar index, a gauge of the US unit's performance against majors, was up 0.5 per cent.
Indian shares rose more than 2 per cent early, after snapping an eight-session rally in the previous day, with renewed confidence the global economic crisis is bottoming out boosting markets across Asia.
Foreigners have bought $1.4 billion worth of Indian shares since mid-March, a key factor that has helped the rupee rise nearly 5 percent from its record low of 52.2 hit on March 3.
Traders said they would be watching the central bank's policy review on Tuesday.
"Monetary policy has generally not had much impact on the rupee, but if there is a repo rate cut and if stocks rise, we could see a bit of appreciation in the rupee," the dealer at the foreign bank said.
Analysts are evenly split about whether the central bank would cut key policy rates to bolster growth.