The rupee pared initial gains to settle just 1 paisa higher at 78.09 (provisional) against the US dollar on Friday amid a muted trend in domestic equities and unabated foreign capital outflows.

A strong dollar overseas and higher crude prices also kept the domestic unit under pressure, forex dealers said.

At the interbank forex market, the rupee opened strong at 78.03 against the greenback and witnessed an intra-day high of 78.02 and a low of 78.09.

It finally ended at 78.09, registering a gain of 1 paisa over its previous close of 78.10.

The dollar index, which gauges the greenback's strength against a basket of six currencies, climbed 0.71 per cent to 104.37.

Brent crude futures, the global oil benchmark, spurted 0.96 per cent to USD 120.96 per barrel.

On the domestic equity market front, the BSE Sensex ended 135.37 points or 0.26 per cent lower at 51,360.42, while the broader NSE Nifty fell 67.10 points or 0.44 per cent to 15,293.50.

Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 3,257.65 crore, as per exchange data.