The local currency remained buffeted in a range for most of the session with a weakening bias as the euro fell for a third successive session and global shares dipped after recent gains.
Dealers said the market awaits the July headline inflation, due on Tuesday, to get a bearing on the Reserve Bank of India's rate stance when it meets next in September.
Indian wholesale prices are expected to rise 7.37 per cent in July from a year earlier, compared to 7.25 per cent in June, as a below-average monsoon pushes up food prices, according to a Reuters poll.
The rupee has been largely helped by a weakness in the global dollar with the euro rising to a one-month high earlier this week on hopes the European Central Bank will act to bring down borrowing costs of Italy and Spain.
"The market has been closely tracking the euro. If the EUR/USD falls below 1.22, we may see some weakness in the rupee," said Naveen Raghuvanshi, associate vice-president at Development Credit Bank.
The partially convertible rupee closed at 55.28/29 per dollar as per the SBI closing rate versus its previous close of 55.27/28. It rose 0.85 per cent in the week, its first rise in four weeks.
The weekly gains were also helped by comments from Finance Minister P. Chidambaram, who sought to allay investor fears about the slowing economy and paralysis in decision making.
The one-month offshore non-deliverable forward contracts were at 55. 55, while the three-month was at 56. 21.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange, all closed at around 55.4950 with the total traded volume at around $3.5 billion.
Copyright @Thomson Reuters 2012