The rupee ended at 43.42/43 per dollar, a 10 paise jump over the previous close of 43.5225/5275. The rally in the rupee was sparked off by a wave of dollar sales by exporters and foreign funds. Friday's close was last seen in mid-August this year and was sparked off by the "feel good factor" after international rating agency Moody's Investor Service upgraded the country's debt outlook from stable to positive.

Forward premiums too tracked the spot rupee and fell as exporters were also selling forward dollars. The six-month premium was quoted at 5.24 per cent compared with Thursday's 5.38, while the one-month premium fell sharply to 5.33 per cent from early highs of 5.68 percent and against Thursday's 5.55 per cent.

However, dealers said that they do not expect the rupee to strengthen further unless the government kicks off second generation reforms immediately after coming to power. "The next time the rupee will appreciate is when the insurance sector opens up and foreign direct investement rules in a few sectors is eased," a dealer in a private bank said.

Dealers in public sector banks said that the rupee is unlikely to appreciate for the time being as the Reserve Bank of India will take this opportunity to buy dollars to strenghten its forex kitty.

Accordingly, the State Bank of India (SBI), considered a surroggate to the RBI, stepped into absorb dollar supplies around the 43.41/42 level, halting the rupee's march in the afternoon trade. At current levels, the rupee is 20 paise higher than its 13-month low of 43.61 hit on September 29.