Mumbai: The Indian rupee pared most losses in afternoon trade on Friday as gains of more than 3% in the domestic equity market offset the demand for dollars from refiners and state-run firms.

At 2:27pm, the partially convertible rupee was at rS48.66/67 per dollar, little changed from its Thursday’s close of 48.68/69. The unit has traded in a narrow Rs48.60-48.74 band so far in the session.

Indian shares rose more than 3% on Friday, as upbeat earnings reports from key US firms fuelled a Wall Street rally overnight and lifted sentiment across Asia.

One-month offshore non-deliverable forward rupee contracts were quoting at Rs48.72/82, marginally weaker than the onshore spot rate.

Dealers said the rupee’s weakness earlier in the session was due to dollar demand from oil firms and state-run banks likely for some defence-related payment.

In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX were both quoting at Rs48.6925, with the total traded volume on the two exchanges at about $715 million.