After a week-long depreciation, the Indian rupee opened strong at 42.76/78 and later rallied on fresh corporate dollar offloading influenced by the decision of four-member Indian National Lok Dal and the sole Rashtriya Janata Party member to support the government, which brightened the prospects of the Vajpayee government winning the crucial vote of confidence in the Lok Sabha on Saturday.

The rupee ended at 42.72/73 as against 42.79/81 of the previous day, gaining about 8 paise. The rupee which had fell sharply by about 25 paise on April six following the AIADMK's decision to withdraw their support to the government, continued its slide due topolitical uncertainty and possible collapse of the government, depreciating about 36 paise till Thursday.

``Friday's political developments induced banks and corporates to liquidate a major portion of the long dollar positions built earlier to enable the rupee to post a good rally,'' dealers said, adding, ``a clear picture will emerge on Saturday after the vote of confidence and if the government survives the rupee will extend its rally and may rule around 42.65 against the dollar.''

The sentiment for the rupee has turned for the better after more than a week of distinctly bearish trend following the Jayalalitha factor which threatened the very survival of the government. The Reserve Bank of India and the State Bank of India had intervened several times in the last ten days to prevent the rupee from crashing further.