A combination of factors, including heightened tensions in West Asia, FII outflows, and sustained negative sentiments at the domestic equity markets, maintained pressure on the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened weaker at 96.81 and traded in the range of 96.30-96.81 before eventually settling at 96.55 (provisional), up 18 paise from its previous close.

The rupee ended 20 paise weaker at 96.73 against the US dollar on Thursday. The US military announced the 13th night of strikes on Thursday against Iran as clashes escalated over shipping routes. The attacks came after Yemen's Houthi rebels said they attacked two Saudi oil tankers in the Red Sea, potentially widening the Iran war as international oil topped USD 100 a barrel.

V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, "Rupee has been stable on Friday, trading around 96.55 to the dollar at 3.30 pm. There are reports of RBI intervention to prevent further depreciation of the rupee. Some PSU banks are also reported to have sold dollars to stabilise the rupee. If crude declines next week, it can further help the rupee to stabilise."

"We expect the rupee to trade with a negative bias as on further escalation in tensions between the US and Iran. Elevated crude oil prices may also pressure the rupee. However, diplomatic talks between the two nations may prevent a sharp fall in the rupee," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

Any intervention by the RBI may also support the rupee at lower levels, he said, adding that the USD-INR spot price is expected to trade in a range of Rs 96.30-96.85. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally down by 0.06 per cent at 101.38.