Representative image of 500 rupee notes and coins.
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The Indian rupee rose on Thursday, tracking the move higher in Asian peers following US GDP data, but had to contend with month-end dollar demand.
The rupee was at 85.6725 to the US dollar by 11:02 am IST, compared with a close of 82.7325 in the previous session.
Asian currencies rose after the dollar index dropped to a two-week low overnight, following a downward revision to the June quarter US GDP numbers.
"Yet again, the cues from Asia are good, but then rupee is not benefiting much," a forex trader at a bank said. "The month-end cash dollar demand from oil and other importers is keeping rupee in check."
Gross domestic product (GDP) in the US increased at an annualised pace of 2.1 per cent April-June quarter, data from the second GDP estimate showed.
This estimate is a revision of the 2.4 per cent growth rate estimate reported last month. Economists polled by Reuters expected GDP for the second quarter to be unrevised.
At one point in the New York session, the dollar index dropped below 103.
The dollar bulls were probably too optimistic regarding the resilience of the US economy and are now facing disappointment, said Amit Pabari, managing director at fx advisory firm CR Forex.
Data that showed US private payrolls rose by a less-than-expected last month also hindered the dollar index.
Meanwhile, traders await India's June quarter GDP data, due later in the day. While the data is not expected to have a major impact on the rupee, it will "provide a read" on how equity inflows could shape up, the fx trader said.