MUMBAI: The rupee nudged higher on Friday in tandem with a rise in shares and supported by the dollar's weakness against major currencies.
At 10:32 a.m. (0502 GMT), the rupee was at 48.53/54 per dollar, compared with Thursday's close of 48.595/605. On Tuesday, it had hit 48.90, its lowest since mid-May.
"While the stock opening is a positive, month-end (dollar) demand should arrest rupee from appreciating sharply," a dealer with a private sector company said.
Oil refiners are the biggest buyers of dollars in the foreign exchange market and they usually make their import payments towards the end of each month.
The main stock index rose 1 percent in early trade as investors looked to build long positions after a 7.2 percent drop over the past two weeks and tracking firmer Asian markets.
Fund flows into shares have been a main driver for the rupee, which hit a record low of 52.2 in early March but rebounded as foreigners bought about $8 billion of stocks over three months.
However, since mid-June foreign investors have sold about $500 million of stocks and the rupee has fallen 2.9 percent so far this month.
The dollar index, a gauge of the U.S. unit's performance versus majors, was down 0.4 percent at 0505 GMT.
Dealers said they would be watching oil as higher prices could increase dollar demand and widen the trade deficit.
Oil surged above $70 a barrel on Friday, extending a 2 percent gain the day before, after rebel attacks on Nigerian oil facilities disrupted supply and equity markets rallied on optimism the global recession was ebbing.
