Forex dealers said besides selling of the American currency by exporters and banks, gains in other Asian currencies against the dollar and a higher opening in the domestic stock market also supported the rupee.
In the latest large opinion poll, the opposition Bharatiya Janata Party and its allies were forecast to win a narrow majority in the 543-seat lower house of parliament, compared with previous surveys predicting that they would fall short.
The domestic currency had gained a massive 47 paise to close at 60.60 on Friday amid heavy selling of the US currency by corporates, exporters and banks.
Industrial countries cannot at this point wash their hands off developing economises and say we will do what we need to, and you do the adjustment you need to, says RBI Governor.
India's consumer inflation should ease in the next two months, and will fall to 8 per cent by the end of the year, says RBI Governor Raghuram Rajan.
Policymakers have been grappling with high prices for food staples such as onions and potatoes even after the central bank raised interest rates by a quarter percentage point in each of its previous two reviews.
Data earlier on Thursday showed the annual consumer price inflation rose to a higher-than-expected 11.24 per cent in November from 10.17 per cent in October.
Bond yields have risen since the Reserve Bank of India raised interest rates for a second consecutive month on October 29.
The rupee has already shed around 3.3 percent over the last five sessions.
New Reserve Bank of India chief makes his first monetary policy statement on Friday with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.
Of the 52 economists polled, 50 expect the policy repo rate to remain at 7.25 per cent, and 47 of 48 respondents see the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.
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The Indian rupee touched record low of 65.52/dollar on Thursday and is down 16 per cent so far this year despite efforts by policymakers to prop it up.
RBI has made it easier for developers to access foreign money to spur low-cost housing projects.
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The rupee had slumped to a record low of 59.9850 rupee to the dollar on Thursday, as the country's record high current account deficit is exacerbating its vulnerability in an emerging market rout.
Overall Indian companies issued guarantees worth $1.21 billion, extended loans worth $291 million and pumped in equities worth $319 million.
SEBI has raised the investment limits for foreign investors.
Heightened volatility makes the debt rollovers difficult.
Import duty on gold is already hiked by a third to 8 per cent.
High current account deficit is leading to the rupee weakening.
Monetary policy committee had recommended no change in the key rate.
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