Forex traders said market participants are assessing the economic implications of the coronavirus outbreak and awaiting cues from the Union Budget.
At the interbank foreign exchange the rupee opened at 71.46 and touched a high of 71.41, registering a rise of 17 paise over its previous close.
On Thursday, rupee had settled for the day at 71.58 against the US dollar.
The domestic unit, however, could not hold on to the gains and was trading at 71.43 against the dollar at 0959 hrs.
Domestic bourses opened on a positive note on Friday and the benchmark index Sensex was later trading 33.87 points higher at 40,947.69 at 0959 hrs, while Nifty was down 2.45 points at 12,033.35.
Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold shares worth Rs 962.28 crore on Thursday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.54 per cent to trade at 59.19 per barrel.
However, strengthening of the American currency vis-a-vis other currencies overseas weighed on the rupee.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.06 per cent to 97.92.
The 10-year government bond yield was at 6.59 per cent in morning trade. DRR DRR DRR