The rupee is trading at 54.48/49, after hitting 54.45 in early deals, its highest since March 1 and higher than its previous close of 54.56/57 on Thursday.
The euro rallied on Thursday, posting its largest one-day gain in two months against the dollar, as European Central Bank President Mario Draghi gave no indication that the bank would cut interest rates further in the euro zone.
Traders also expect dollar inflows towards the stake-sale in a government firm. The government will sell a 12.5 percent stake in state-run Rashtriya Chemicals and Fertilizers through an auction of shares to raise about $57 million.
The pair is seen moving in a 54.40 to 54.70 range initially in the session. Traders, however, expect importers to come in to buy the greenback at lower levels, limiting a very sharp slide.