At 9.40 a.m., the rupee was at 55.16 to the dollar versus its last close of 55.12.
The rupee gained on Thursday as a sharp recovery in the euro prompted foreign banks to sell dollars, while a rise in domestic shares spurred custodian banks to also sell the greenback.
However, on the opposite side, good dollar demand from defence and oil companies, limited what could have been a sharper rise in the rupee.
Going ahead, investors have been widely anticipating quick government action to relax investment rules and cut subsidies once the elections for the ceremonial post of president on Thursday are out of the way.
Policy reforms are seen as critical for the government to meet its fiscal deficit target of 5.1 percent for the year ending in March, and bolster confidence in a local currency that just last month had dropped to a record low against the dollar.
(with inputs from Reuters)