Traders said the rupee was likely to open at 49.10 per dollar and strengthen as much as 49 during the day. It had ended 0.6 percent stronger at 49.51/52 on Tuesday.

The dollar nursed heavy losses early in Asia on Friday, having suffered its biggest decline in more than two years against a basket of major currencies after a European debt deal sparked a massive relief rally in risk assets.

At 0246 GMT, the MSCI index of Asian stocks ex-Japan was up 1.14 percent and the Nifty India stock futures traded in Singapore were 1.65 percent higher, suggesting a strong start to local shares.

Euro zone leaders struck a last-minute deal on Thursday to contain the currency bloc's two-year-old debt crisis but are now under pressure to finalise the details of their plan to slash Greece's debt burden and strengthen their rescue fund.

India's central bank raised interest rates on Tuesday for the 13th and possibly final time in a tightening cycle that began in early 2010, on expectations that persistently high inflation will finally begin to ease starting in December.