The rupee opened on a weak note and fell to a day's low of 71.47.

The rupee recovered from early lows to close higher by 13 paise at 71.14 against the US currency on Friday in line with firm local equities, defying gains in the greenback overseas and foreign capital outflows.

The rupee opened on a weak note and fell to a day's low of 71.47 due to gains in the dollar and crude oil in global markets. Foreign investors pulling out Rs 1,339 crore from equities on a net basis also weighed on the local unit.

However, a recovery in equity markets amid hopes of a sector-specific stimulus package by the government to arrest the slowdown in the economy helped the rupee pare losses and touch a high of 70.50 to the US dollar.

The local unit finally settled at 71.14 against the US dollar, showing a gain of 13 paise over the previous close. On Wednesday, the rupee had settled at 71.27 against the US dollar.

The forex market was closed on Thursday for the Independence Day.

On a weekly basis, the rupee lost 36 paise primarily due to heavy losses on Tuesday due to trade war concerns.

Forex traders said Prime Minister Narendra Modi taking stock of the economy helped boost investor sentiments. PM Modi on Thursday comprehensively reviewed the state of the economy with Finance Minister Nirmala Sitharaman amid a slowdown in various sectors.

There are expectations that the government would come out with sector-specific stimulus sometime soon.

Meanwhile, the 10-year government bond yield was at 6.54 per cent on Friday. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.12 per cent to 98.26.

Brent crude futures, the global oil benchmark, rose 0.94 per cent to trade at USD 58.78 per barrel.

Benchmark indices Sensex and Nifty pared early losses to settle marginally higher on Friday. After swinging 470 points during the day, the 30-share Sensex settled 38.80 points or 0.10 per cent higher at 37,350.33. The broader NSE Nifty gained 18.40 points, or 0.17 per cent, to close at 11,047.80.

Foreign institutional investors (FIIs) remained net buyers in the capital markets, pulling out Rs 1,339 crore on Friday, according to provisional data.

Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.0968 and for rupee/euro at 79.4554. The reference rate for rupee/British pound was fixed at 85.7442 and for rupee/100 Japanese yen at 66.82.

On the global front, US President Donald Trump has said that China is doing very poorly as a result of the trade war.

"I think the longer the trade war goes on, the weaker China gets and the stronger we get. We're taking in massive amounts of money. Billions and billions of dollars. And I think the longer it goes, the stronger we get. I have a feeling it's going to go fairly short," he said on Thursday.