MUMBAI: The Indian rupee edged up in volatile trade on Friday, supported by strong local shares, but dollar demand from importers is seen limiting the gains.
The outcome of elections in five Indian states was also being eyed for cues on the rupee's direction, traders said.
At 11:28 a.m. (0558 GMT), the partially convertible rupee was at 44.88/89 per dollar versus 44.985/995 last close. It had moved in 44.85-45.05 range so far in the day.
"Equities are being watched along with the euro," said a foreign exchange dealer with foreign bank.
"But 45.05 is a crucial support for the rupee and elections are going to be a key factor."
India's ruling Congress-led coalition was leading in the key state of West Bengal, ruled by communists for more than three decades, as votes from state elections were counted on Friday.
Local shares too gained 1.3 percent, but in choppy trade, tracking the emerging results of state elections.
The vote may define how aggressively the federal government moves ahead with long-awaited reforms such as raising fuel prices and a land acquisition bill for farmers.
The euro was at $1.4232 on Friday. It had been at $1.4162 at the end of trade in the local forex market on Thursday.
The euro eased against the dollar on Friday but remained above a six-week low, getting some respite after commodities bounced off overnight lows and as investors refocused attention on more interest rates rise prospects in the euro zone.
The index of the dollar against six major currencies was down 0.05 percent 75.203 points. It was 75.505 points at end of trade on Thursday.
The one-month onshore forward premium was at 27.50 points versus 25.25 points last close. The three-month was at 77.75 points against 77.25 points and the one-year was at 292.75 points compared with 290.25 points.
The one-month offshore non-deliverable forward contracts were quoted at 45.14, weaker than the onshore spot rate.
In the currency futures market , the most traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all at 44.9925, with total volume at $3.51 billion.
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