At 10:16 a.m., the partially convertible rupee was at 48.33/35 per dollar, half a per cent stronger than its previous close of 48.58/60.

India's central bank on Friday cut its short-term rates by 1 percentage point each, its fourth cut in four months, and tried to draw more funds into the country to boost growth as it warned of a tough year ahead.

It more than doubled the foreign institutional investment (FII) cap in corporate bonds to $15 billion from $6 billion and said it would recapitalise state-run banks to the tune of 200 billion rupees over the next two years.

"The rate cuts and also the extending of ceiling on FIIs in corporate bonds have helped the rupee," said a senior dealer at a private bank. "The rupee may trade in a 47.90-48.50 range today."

Dealers said they would also be watching the local share market for cues on fund flows.

Indian shares opened 1.7 per cent higher after the rate cuts and measures by the federal government to boost growth, but concerns about quarterly earnings could cap gains.