The rupee was stronger on Monday aided by dollar inflows that offset choppy local

RELATED ARTICLES Rupee slide: RBI Governor meets Manmohan Singh Rupee up 26 paise against dollar after initial fall Rupee up 26 paise against dollar after initial fall Petrol price hike fails to lift rupee; diesel eyed Rupee hits record low; govt may lift diesel price

shares, though dealers said, importers' demand for the greenback could put a lid on the gains.

At 10:48 a.m. (0518 GMT), the partially convertible rupee was at 50.2050/2100, compared with Friday's close of 50.32/33, after moving in a 50.1700 to 50.4050 band.

"There are some inflows today, because of which the rupee is strengthening. It does not look as if the RBI is intevening," the chief forex dealer of a state-run bank, said.

However, traders with two foreign banks said the Reserve Bank of India likely sold dollars around 50.40.

Three state-run banks said dollars inflows supported the rupee. The RBI usually sells dollars through state-run banks.

India's main stock index was up 0.05 percent, after opening down.

Traders said an uptick in dollar demand from oil importer to meet their month-end payment requirement is likely to prevent a sharper rise in the local unit.

Oil is India's largest import item and oil refiners are the largest buyers of dollars in the local market.

"There has been some (dollar) selling by the nationalised banks, and by some foreign banks as well. But I expect some buying by the oil importers," said Vikas Babu, a foreign exchange trader at state-run Andhra Bank.

Dealers expect the the rupee is likely to stay in a range in the near-term, after its recent rally, and are awaiting the centrakl bank's policy on Tuesday for further direction.

"It should consolidate at these levels for sometime before breaking in either direction," said said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.

The rupee strengthened 2.41 percent last week, its biggest weekly rise since the last week of October.

The Reserve Bank of India will review its policy on Tuesday and none of the 22 economists polled by Reuters last week expect it to cut rates.

One-month offshore non-deliverable forward contracts were quoted at 50.62, indicating some weakness in the short term in 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 all were around 50.28 on total volume of $1.2 billion.