Indian rupee erased some of the intraday gains but ended higher at 74.81 per dollar, amid volatile trade seen in the domestic equity market.
It opened 11 paise higher at 74.74 per dollar against Thursday's close of 74.85 and traded in the range of 74.68-74.89.
At 14:06 IST, the Sensex was down 127.57 points or 0.34% at 37608.50, and the Nifty was down 28.70 points or 0.26% at 11073.50.
At 10:02 IST, the Sensex was up 58.80 points or 0.16% at 37794.87, and the Nifty was up 20.20 points or 0.18% at 11122.40.
The dollar slipped to two-year lows on Friday and is on track to post its biggest monthly decline in 10 years, as investors worried that a recovery in the U.S. economy could be stymied by a second wave of coronavirus.
"The Fed’s dovish policy stance and an improved risk appetite is causing the greenback to lose value, which is supporting the rupee for the time being. However, RBI has been continuously mopping up dollar inflows, and historical trends indicate that August has been a seasonally weak month for the rupee, that may continue this year as well," said Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking.
"Market is expecting a weak US GDP data, and even if there a little bit of respite there, dollar index may rebound and that can put some pressure on the rupee."
"74.50 remains a very strong hurdle for rupee bulls, while 75.50 is a strong support. Any breakout from these levels could indicate a directional trend for the rupee," she added.
Oil prices rose on Friday, recovering further ground after touching three-week lows in the previous session, hit by a record decline in US growth as the coronavirus ravaged the world’s biggest economy and oil consumer.