The rupee appreciated 8 paise to close at 83.16 against the US dollar on Friday, helped by a positive trend in domestic equities and fresh foreign capital inflows.
However, rising crude oil prices in international markets and a strong greenback overseas restricted gains for the local unit, forex traders said.
At the interbank foreign exchange market, the local unit opened flat at 83.23 against the greenback.
The rupee oscillated between an intra-day low of 83.24 and a high of 83.12 against the greenback and finally settled at 83.16, higher by 8 paise from its previous close of 83.24.
"The Indian rupee remained the second-best performer among the Asian currencies following Chinese currencies. The dollar inflows and stable crude oil prices helped the rupee to buck the past two week's bearish trend," said Dilip Parmar, Research Analyst at HDFC Securities.
The expectations of a strong December US jobs report could temporarily reverse the soft-landing playbook, Parmar said.
Traders will also closely watch India's 2024 growth forecast for next week's rupee directions, Parmar said, adding that from the level front, spot USD/INR has support at 83.10 and resistance at 83.35.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.25 per cent lower at 102.68.
Brent crude futures, the global oil benchmark, advanced 0.90 per cent to USD 78.29 per barrel.
On the domestic equity market front, Sensex surged 178.58 points, or 0.25 per cent, to settle at 72,026.15 points. The Nifty advanced 52.20 points, or 0.24 per cent, to 21,710.80 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they bought shares worth Rs 1,513.41 crore, according to exchange data.
On the domestic macroeconomic front, the services sector growth in India rose to a three-month high in December supported by favourable economic conditions and positive demand trends.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 56.9 in November to 59 in December, highlighting a sharp increase in output that was the most pronounced since September.
Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.
