Besides, a higher opening in the domestic equity market, where the Sensex soared to hit new record high of 21,710 on strong FII inflows, also supported the local currency, forex dealers said.
Increased selling of the American currency by banks and exporters also boosted the rupee's sentiment, they said.
The rupee had zoomed 64 paise to close at 61.11 against the US dollar in yesterday's trade after domestic stock indices logged new peaks.
Indian rupee fails to break past 61 in early attempts
(Reuters) Indian rupee hits a new three-month low, but fails to break past 61 in early attempts. The pair is flat at 61.11/12 after opening at 61.01. A large U.S. bank buyer in early trades, dealers say.
A breach of 60.84 will mark the pair's lowest level since August 12.
NSE Nifty hits record high, up 0.4 percent. Overseas investors continue heavy buying of Indian shares. At $207.84 million on Thursday, it was their biggest daily purchase since Dec. 19, provisional exchange data shows.
The euro hovered near a two-month high against the dollar early on Friday following a relief rally when the European Central Bank left its interest rates unchanged.
Most other Asian currencies like rupiah and Taiwan dollar trading stronger compared with the U.S. dollar.