The rupee posted its biggest single-day gain in nearly a month on Friday as custodian banks and corporates sold the greenback aggressively, although broader sentiment remained cautious ahead of key events, including retail inflation later in the day.
India is due to post consumer price inflation data later on Friday, with a Reuters poll expecting it have eased to 7.80 per cent in August from July's 7.96 per cent.
Caution also remains ahead of a key week for global risk, with the Federal Reserve set to hold its policy meeting amidst concerns it may move to raise interest rates, while Scotland is due to hold its independence vote.
For the week, the rupee fell 0.5 percent, its worst weekly fall since the week to August 1. with the domestic share market in a consolidation phase following a recent string of record highs,
"There was aggressive dollar selling by custodians and corporates today," said Vikas Babu Chittiprolu, a senior foreign exchange dealer with state-run Andhra Bank.
"The rupee will remain in a 60.50 to 61.30 broad range next week. On the CPI, market expects a slightly lower number than in July," he added.
The partially convertible rupee ended at 60.65/66 per dollar, 0.5 per cent stronger than its Thursday's close of 60.9250/9350. This is the rupee's best single-day performance since August 14.
Traders will continue to monitor movements in other Asian currencies and shares for near-term direction.
In India, overseas funds have bought a net $32.90 billion worth of debt and shares so far this year, but turned mild sellers in shares over the previous two sessions.
In the offshore non-deliverable forwards, the one-month contract was at 61.03 while the three-month contract was at 61.62.
