The rupee is expected to open higher on Friday, taking cues from firmer Asian stock markets and lower oil prices but traders will be wary of inflation data due by noon (0630 GMT).

U. Venkataraman, head of treasury at IDBI Bank, said the rupee could weaken if inflation was higher than expected, but saw "good selling interest" around 43.10 per dollar.

"The rupee could gain some lost ground at the start on positive Asian stock markets and moderate softening of oil prices, but inflation will hold the key," he said.

The partially convertible rupee ended at 42.97/98 on Thursday, weaker than Wednesday's close of 42.895/905.

The benchmark share index fell 2.2 percent to its lowest close in a week on Thursday, spooked by inflation worries and high oil prices, taking its losses in 2008 to more than 25 percent.

A Reuters poll this week forecast annual inflation rate to have risen to a 13-year high of 9.82 percent in early June, higher than the previous week's 8.75 percent.