The Indian rupee advanced by 8 paise to close at 74.43 against the US dollar on Friday, helped by some correction in crude oil prices and weaker greenback against key rivals.

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However, the rupee's further recovery was restricted by continuous foreign fund outflows and sell-offs in domestic equities, analysts said.

At the interbank foreign exchange market, the rupee opened at 74.50 a dollar and during the day, it witnessed an intra-day high of 74.40 and a low of 74.55 against the American currency.

The domestic unit finally settled at 74.43 against the American currency, up 8 paise over its last close of 74.51.

Meanwhile, the US dollar index, which measures the greenback's strength against the basket of six currencies, fell 0.13 per cent to 95.61.

"The Indian rupee appreciated on back of fall in crude oil prices, corporate dollar inflows along with exporters dollar selling and debt raising helped the rupee in trimming weekly losses," said Dilip Parmar, Research Analyst, HDFC Securities.

During this week, the local currency has depreciated 28 paise against the US dollar.

On a weekly basis, spot USDINR marked the first loss in the last five weeks on the back of a surge in virus cases, higher crude oil prices and policy divergence between US Federal Reserves and Indian RBI, Parmar said.

In the coming days, price action of USDINR will be determined by Crude oil prices, Federal Open Market Committee (FOMC) meeting outcome, risk sentiments and dollar inflows, he added.

Brent crude futures, the global oil benchmark, fell 1.95 per cent to USD 86.66 per barrel.

Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said, "Rupee traded in a narrow range despite volatility in domestic and global equities and also as the dollar retraced from higher levels. On the domestic front, no major cues are scheduled but from the US market, participants continue to keenly watch US treasury yields that are moving higher."

Somaiyaa added that on Friday volatility for the dollar could remain low as no economic data is expected to be released from the US. Investors could take some cues from the treasury secretary Janet Yellen's speech.

On the domestic equity market front, the BSE Sensex ended 427.44 points or 0.72 per cent lower at 59,037.18, while the broader NSE Nifty declined 139.85 points or 0.79 per cent to 17,617.15.

Foreign institutional investors were net sellers in the capital market on Thursday, as they offloaded shares worth Rs 4,679.84 crore, as per stock exchange data.