"The state bank has reduced the dollar buying rate to 113.95/114.05 rupees," said a currency dealer. Three other dealers confirmed the move, reported Reuters.

It closed at 114.03/08 with the state bank seen buying, dealers said.

The central bank said the rise in the currency was due to a weaker dollar.

"The dollar has been weakening. I suppose the rupee will strengthen a little bit," the Reuters reported quoting the Central Bank Governor.

"Still we are maintaining the 40-cent range. We might increase it if necessary. But at the moment, we find this range is very comfortable with many people."

The central bank, which has kept the rupee at a flat rate of 114.80 to the dollar since mid May, has allowed the currency to trade within the band that has increased to 40 cents from 20 cents in November.