Heavy dollar selling by exporters and some banks on the back of weakness in dollar overseas also boosted the rupee sentiment, forex dealers said.
At the Interbank Foreign Exchange market, the rupee opened higher at 54.15 a dollar from previous close of 54.38 and immediately touched a low of 54.20.
Helped by FII inflows worth Rs 2,327.82 crore (about $430 million), the rupee later rallied to a high of 53.33 before settling at a four-month high of 53.45 -- up 93 paise, or 1.71 per cent over Thursday's close.
The unit also recorded its third successive week of gains.
Today's gain is one of the biggest gains logged by the currency in this year. On September 14, rupee vaulted 113 paise or 2.03 per cent to close at 54.30.
The buying in favour of rupee also received a boost after Finance Minister P Chidambaram today cut withholding tax on overseas borrowings to 5 per cent from 20 per cent, a move expected to bridge current-account
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