The rupee rose on Tuesday, supported by gains in local shares and improved global risk appetite as fears of a possible debt default by Greece eased slightly, although dollar demand from oil refiners kept gains under check.
Oil is the country's biggest import item and consequently local oil importers are the biggest purchasers of dollars in the local currency market.
At 10:33am, the rupee was at 49.67/68 to the dollar, stronger than Monday's close of 49.79/80.
"Once the dollar demand from oil firms eases, rupee should rise to as much as 49.50 due to the positive cues from equities and global markets," said Naveen Raghuvanshi, associate vice president of forex trading at the Development Credit Bank.
In January, the rupee has jumped around 7% against the dollar so far, its biggest monthly gain since the last quarter of 2001, according to data available on Thomson Reuters.
Asian shares and the euro recovered earlier losses on Tuesday after Greek Prime Minister Lucas Papademos raised hopes for a deal to be reached this week to avoid a default.
One-month offshore non-deliverable forward contracts were at 50.02.
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 around 50.01 on total volume of $830 million.