The rupee trading higher at 53.96/97 versus its previous close of 54.09/10 on the back of a recovery in risk assets regionally.

Month-end dollar demand from oil firms is likely to limit a very sharp fall.

Asian shares rebounded as U.S. equities rose on solid data and the Federal Reserve's affirmation of its commitment to monetary stimulus, but investors remained wary of political gridlock in Italy reigniting the euro zone financial crisis.

Most Asian currencies are also trading stronger compared with the dollar.

The pair is seen moving in a 53.85 to 54.15 range during the session.