The rupee ended at a new one-year closing high for the fifth day in a row on Friday, buoyed by increased dollar remittances by exporters in the belief that the currency was set to climb higher.
Intervention by the Reserve Bank of India had little impact, as the rupee powered past the psychological 48 per dollar mark to touch an intra-day high of 47.9750. It eased towards close to end at 48.00-01, up nearly 0.4 per cent on the week.
It had ended Thursday at 48.0775/0825, and has now gained 2.23 per cent from a lifetime low of 49.08 in mid-May.
Traders said despite the rise, the rupee was undervalued by about 2.5 per cent on a trade-weighted basis due to the dollar's sharper fall against other major currencies.
Analysts said the outlook was favourable for the next few months due to higher interest rate differentials, which offer better returns on investments for expatriate Indians and record foreign exchange reserves of $67.75 billion.
Rupee premiums on dollar forwards eased in line with the firm rupee as exporters stepped up encashing receivables. Forwards reflect hedging requirements by importers and interest rate differentials between India and the United States.
The benchmark six-month ended at an annualised 3.70 per cent, down from the morning's 3.80 per cent and off the previous close of 3.84 per cent.