The Indian currency rallied for the third consecutive day on Friday by 18 paise to end the day firmer at 46.94 versus the US currency on heavy offloading of the greenback by local operators and strong equity prices.

The rupee resumed on a higher rate at 47.08 against the dollar on weak demand for dollars by local traders.

Afterward, it fluctuated in wide range between 46.90 and 47.06 in intra day trade.

Other Asian currencies, barring the yen, gained against the dollar amid growing risk tolerance. But, the euro edged slightly lower against the dollar ahead of the announcement of the stress test results for 90-odd European banks.

The index of the dollar against six major currencies was at 82.67 versus 82.63.

The euro was marginally down at USUSD 1.2848 after earlier gaining as Germany's Ifo institute said its business climate index jumped to 106.2, the highest level since July 2007. Economists expected a decline.

The euro rallied on strong euro-zone economic reports and better-than-expected US corporate earnings.

The pound soared after a report showed the UK financial system grew almost twice as much as analysts estimate

The British pound increased to USUSD 1.5388 as against USUSD 1.5278. The euro dropped down against the UK currency.

Morgan Stanley's Hong Kong-based strategists said, ''The rupee's economic fundamentals are deteriorating as growth slows, the balance of payments declines and because monetary policy may not be sufficient to temper inflation.''

Offshore forward contracts showed that the Indian unit will trade at 47.51 to the dollar in three months as compared with projections for a rate of 47.72 on Thursday and 47.35 at the end of last week.

Meanwhile, the six month forward premium of dollars was weaker at 4.12/14 per cent (4.22/24) and one year also softer at 3.50/52 per cent (3.55/57).

Global major currencies against the rupee were Euro, touching 60.48/50 per unit (60.62/64), GBP at 72.32/34 per unit (71.88/90) and Japan's Yen was at 53.62/64 per 100 units (54.32/34), brokers added. (With Inputs from Agencies)