The rupee is trading at 55.996/02 to the dollar compared to its previous close of 56.16/17, en route to snap a four-day losing streak that saw the Indian currency hit its lowest this month.
Some of the gain, with a session high at 55.85, is being attributed to expectations for another round of quantitative easing from the Federal Reserve. However, month-end dollar demand from oil companies will likely limit further gains in the rupee.
"There are no specific flows in the market as such, but broadly people are expecting more stimulus from the Fed," a senior dealer with a private bank said.
The Sensex fell 0.4 per cent ahead of the monthly expiry of derivative contracts.
