The rupee stayed higher on the day at 55.42/43 versus its previous close of 55.65/66 as gains in the domestic share market and the euro's rally hurt demand.
However, further losses were prevented by some buying from oil companies.
The dollar index fell to a four-month low on Friday, weighed down by the euro's gains after the European Central Bank took bold measures to lower borrowing costs for Spain and Italy.
BSE Sensex closed up 1.95 per cent. Traders said there was also some corporate dollar selling.
