The rupee was at 83.4625 against the U.S. dollar as of 09:40 a.m. IST, marginally higher than its previous close at 83.4925.
The dollar index fell to its lowest in three weeks in Asia trading and was last down 0.1% at 105. Broad dollar weakness helped lift the rupee's Asian peers with the Japanese yen up 0.4% at 160.59 and the Chinese yuan also up about 0.1%.
Meanwhile, Brent crude oil futures eased slightly after touching their highest level since April of USD 87.60 per barrel.
Broad interbank dollar offers aided the rupee in early trading on Friday, a foreign exchange trader at a private bank said. The rupee may look to rise over 83.40 but importers' hedging demand could cap gains, the trader added.
Traders will keep a close eye on the U.S. non-farm payrolls report due later in the day for cues on the future path of Fed policy rates.
Mostly weak economic data this week has weighed on the dollar and U.S. bond yields, with the odds of a September rate cut by the Fed rising to about 73%, up from about 66% a week earlier, according to the CME's FedWatch tool.
The non-farm payrolls report is expected to show that the U.S. economy added 190,000 jobs in June, down from 272,000 in July, according to economists polled by Reuters.
"We still think that the dollar should weaken from here, with the Fed having the space to cut rates as the labour market softens further," Lloyd Chan, senior currency analyst at MUFG Bank said in a note.
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