"Today's spot will be settled on Tuesday which is the policy day. So, we are seeing a spurt in buying interest by foreign banks," says dealer.
The Reserve Bank of India policy on Tuesday likely be the next trigger with any hike in the repo rate to negatively impact the INR.
Foreign funds extend buying in local stocks for a 15th session, being provisional buyers of $161.5 million on Thursday, exchange data showed.
The dollar struggled near a two-year low against the euro in early Asian trade on Friday, as strengthened expectations the U.S. Federal Reserve will maintain its asset purchases through early next year undermined the greenback.
A Reuters poll shows that investors raise long positions in Asia FX.
Technicals show USD/INR may see a relief rally.