The rupee climbed to near-three week highs on Monday as softer oil prices calmed concerns of a widening trade deficit, but weakness in the offshore market checked sharp gains.

At 9:49 a.m. (0419 GMT), the partially convertible rupee was at 42.81/82 per dollar, 0.14 percent stronger than Friday's close of 42.87/88. It hit a 15-month low of 43.50 early this month. "There has been dollar selling by some custodial banks but dollar/rupee should find support around 42.75 levels," said U. Venkatraman, head of treasury at Mumbai-based IDBI Bank.

Asian stocks edged up, the dollar gained and government bonds fell on Monday after Washington proposed an emergency plan to rescue the top US mortgage finance companies, offering to buy shares if necessary.

Oil was trading above $144 a barrel, below a record high of $147.27 hit on Friday. However, a weak local stock market weighed on sentiment. The benchmark index opened down more than a percent.

Foreigners have sold $6.8 billion worth of stocks so far this year after buying a record $17.4 billion in 2007. The rupee has dropped 8 percent so far this year, after gaining more than 12 percent in 2007. One-month offshore non-deliverable forward contracts were quoting around 43.08/43.18, weaker than the onshore rate.