While the market was expecting the government to stick to its borrowing plan for now, a Reuters poll showed economists expecting 500 billion rupees of extra bond sales.
The rupee's gains were further aided by a strong global risk sentiment after Spain unveiled a crisis budget, which many saw as a precursor to the country seeking a bailout.
"The euro moves have helped the rupee plus good inflows have been hitting markets for the past two-three days," said Paresh Nayar, head of fixed income and forex trading at First Rand Bank in Mumbai.
"The market borrowing is good for bonds and stocks and is helping the INR as well."
The partially convertible rupee rose to 52.55, a level not seen since May 1. At 4.17 GMT, it was trading at 52.66/68, from Thursday's close of 53.01/02.
The rupee is on course for a fourth week of gains and its biggest monthly gain since January. It is also on course for its largest quarterly gain since June quarter of 2009, all pointers to the sharp turnaround in the rupee's fortunes after the government unveiled a raft of reforms.
That has been further validated as long positions in the rupee climbed to their largest level since early February, a survey of 11 analysts showed on Thursday, as investors hailed the government's fast-tracked fiscal and economic reforms.