The rupee started the week on a winning note after stronger-than-expected China trade data lifted risk appetite for emerging market assets by easing some of the recent concerns about the global economy.
Data on Monday showed China's exports in September grew more than the market expected, while imports surprisingly expanded, alleviating worries about deteriorating domestic demand in the world's second-largest economy.
But broader gains were capped ahead of consumer inflation data. Consumer price inflation is forecast to have eased to 7.2 percent in September, its lowest level since the government started releasing the data in 2012, according economists surveyed by Reuters.
"We expect the rupee to trade range-bound in the near-term between 60.70 and 61.50," said Chintan Karnani, chief analyst at Insignia Consultants, a currency
The partially convertible rupee closed at 61.0950/1050 per dollar compared with 61.34/35 on Friday.
"The next key factor will be the cues from state elections in Maharashtra - if the BJP wins big, it will help boost the rupee as this would enable the federal government to push through more reforms."
Prime Minister Narendra Modi spearheaded his party's campaign for elections later this week in Maharashtra, knowing that victory in the home of India's financial hub Mumbai will make it easier to push through economic reforms.
The dollar index, which measures the greenback against a basket of currencies, was down close to 0.5 per cent for most part of the session.
The rupee also benefited as Indian shares closed higher on Monday as blue-chips recovered from recent losses.
In the offshore non-deliverable forwards, the one-month contract was at 61.38/48 while the three-month was at 61.98/62.08.
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