The Indian rupee pared early losses to close 6 paise higher at 74.40 against the US dollar on Friday following gains in the domestic equities. At the interbank forex market, the domestic currency witnessed heavy volatility. The local unit opened weak at 74.55 a dollar and touched a low of 74.58 in morning trade.

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The local unit recovered later and touched a high of 74.37 during the day. It finally closed at 74.40 against the American currency, registering a rise of 6 paise over its previous close. On Thursday, the rupee had settled at 74.46.

"Rupee traded positive again as the capital market keeps fund inflow on back of a flurry of IPOs and stable market condition globally. Dollar index basing also helped Rupee take support near 74.55. Going ahead, the rupee can be seen in a range of 74.25-74.60," said Jateen Trivedi, Senior Research Analyst at LKP Securities.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.10 percent to 92.91. On the domestic equity market front, the BSE Sensex ended 138.59 points or 0.26 percent higher at 52,975.80, while the broader NSE Nifty was up 32 points or 0.2 percent to 15,856.05.

Global oil benchmark Brent crude futures fell 0.05 percent to USD 73.75 per barrel. Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 247.59 crore, as per exchange data.