The Indian rupee eked out a marginal 4 paise gain to close at a one-week high of 74.88 against the US dollar on Friday despite volatile domestic equities.

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At the interbank forex market, the domestic unit opened at 74.78 against the greenback and witnessed an intra-day high of 74.74 and a low of 74.98 during the day's trade. It finally ended at 74.88 a dollar.

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On a weekly basis, the rupee gained 2 paise against the US dollar.

The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.22 per cent to 93.55.

"The rupee consolidated in a narrow range in the first half of the session but fell in the latter half following weakness in domestic equities and suspected month-end oil related dollar buying," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Market participants remained cautious also ahead of the important FOMC policy statement that is scheduled next week.

Expectation is that the commentary could be dovish and that could be the dollar supported at lower levels,? Somaiyaa said.

"We expect the USDINR (Spot) to trade sideways with a positive bias and quote in the range of 74.70 and 75.20," he added.

Dilip Parmar, Research Analyst, HDFC Securities, said this week remained relatively calmer even after volatile domestic equities, however retreat of crude oil and dollar index from high added tailwind in rupee.

"With multiple IPOs lined up in coming weeks, dollar supply looks huge but at the same time, weakness in equities could limit the price action within range," Parmar added.

The downside as well as upside remains capped, with the market heading towards a holiday truncated week, he said.

On the domestic equity market front, the BSE Sensex fell 677.77 points or 1.13 per cent to end at 59,306.93, while the broader NSE Nifty tanked 185.60 points or 1.04 per cent to 17,671.65.

Brent crude futures, the global oil benchmark, rose 0.21 per cent to USD 84.50 per barrel.

Foreign institutional investors were net sellers in the capital market Thursday as they offloaded shares worth Rs 3,818.51 crore, as per exchange data.