The Indian rupee declined 3 paise to 74.28 against the US dollar in opening trade on Friday, tracking foreign fund outflows amid a rally in the domestic equity market.

However, strong macroeconomic data and a weak US currency against its major rivals overseas restricted the rupee’s fall, forex dealers said.

At the interbank foreign exchange, the rupee opened weak at 74.27 against the dollar and dropped further to quote 74.28, a fall of 3 paise from the last close.

In the previous session, the rupee had settled at 74.25 against the US dollar.

Foreign institutional investors were net sellers in the capital market on Thursday as they offloaded shares worth Rs 212.11 crore, as per exchange data.

On the domestic equity market front, BSE Sensex surged 278.94 points to hit a fresh intra-day high of 55,122.92, while the broader NSE Nifty rose 85.20 points to record 16,449.60.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent at 92.97.

Declining prices of food items like vegetables pulled down retail inflation to 5.59 per cent in July, bringing it back within the RBI's comfort zone after two months, official data showed on Thursday.

The Consumer Price Index (CPI) based inflation was 6.26 per cent in June and 6.73 per cent in July 2020.

Industrial production surged by 13.6 per cent in June mainly due to a low-base effect and good performance by manufacturing, mining and power sectors but the output remained below the pre-pandemic level.

Global oil benchmark Brent crude futures slipped 0.55 per cent to $70.92 per barrel.