Traders also say oil-related dollar demand is capping broader gains in the rupee.
The partially convertible rupee closed at 60.30/31 per dollar compared with 60.28/29 on Friday.
The partially convertible rupee closed at 60.19/20 per dollar versus its close of 59.75/76 on Wednesday after earlier gaining to a one-week high of 59.57.
Forex dealers said though increased demand for the US currency from importers put pressure on the rupee but a higher opening in the domestic equity market and the dollar's rise against other currencies overseas, capped the losses.
It moved in a range of 59.80 and 59.99 per dollar during the morning deals.
The rupee resumed higher at 59.69 per dollar as against the last closing level of 59.73 at the Interbank Foreign Exchange market.
The rupee resumed higher at 60.13 per dollar as against the last closing level of 60.20 at the Interbank Foreign Exchange market, and hovered in a range of 60.07 and 60.18 per dollar before quoting at 60.08 at 1000 hours.
Forex dealers said besides increased dollar selling by exporters, strength in other currencies against the American currency overseas also supported the rupee but a lower opening of the domestic equity market capped the gains.
Traders will continue to focus on the measures new Prime Minister Narendra Modi-led government will take to bring down the fiscal deficit and fight inflation.
Central bank steps up dollar purchases to check rupee gains
The moves by the RBI, announced late on Wednesday, should increase supplies of gold and brighten the earnings outlook for jewellery makers after the government took tough measures to curb imports last year, analysts said.
The rupee had surged 37 paise to end at a nine-month high of 59.68 against the dollar on Tuesday. Forex market remained closed on Wednesday for 'Buddha Purnima'.
Weakness of the dollar in the overseas market also boosted the rupee, a forex dealer said.
Most dealers said the heavy buying by state-run banks was on behalf of the central bank, looking to limit the volatility in the rupee, in the face of foreign fund flows into the share market.
The rupee had gained 6 paise to close at 60.07 against the dollar in Thursday's trade on fresh selling of the American currency by banks and exporters in view of strong capital inflows.
The rupee closed 2 paise lower at 60.13 on Wednesday as a sudden demand for the US currency emerged at fag-end of trade.
He said the total capital requirement for state-run banks is Rs 455 billion ($7.6 billion) in 2014/15 fiscal year, much lower than the Rs 113 billion provided for recapitalisation in the interim budget in February.
The rupee had gained 10 paise to close at 60.11 against the dollar in Tuesday's trade on fag-end selling of the US currency by banks and exporters.
In New York market, the dollar was little changed against major rivals yesterday as investors continued to comb through economic data and speeches from central bank officials to get a better sense of when the Federal Reserve could begin to raise interest rates.
The rupee had lost 31 paise to close at one-month low of 61.07 on Wednesday on sustained dollar demand from banks and importers.
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