The rupee rose on Wednesday as domestic shares recovered from a five-day slump, though concerns about recent heavy foreign outflows and dollar demand from oil importers kept gains in the local currency in check.
Investors are also growing cautious ahead of the February industrial output data and March consumer inflation due on Friday, which will provide important cues ahead of the central bank's monetary review on May 3.
The Reserve Bank of India has cut interest rates twice already so far this year, but investors are split on whether the central bank will ease again next month.
"The cues are mixed. Headwinds are from the lack of confidence in macro fundamentals and risk of FIIs pull-out from the equity market," said Moses Harding, head of asset-liability management at IndusInd Bank.
"However, rupee gets strong support from very high premium and robust flows into debt capital account," Harding said.