The rupee offset initial gains to settle 7 paise lower against the US currency on Tuesday at 81.88 as higher crude oil prices and a subdued trend in domestic equities weighed on investor sentiment.
Forex traders said the strengthening of the US currency in the overseas market has further eroded investor sentiment.
In the interbank foreign exchange market, the domestic unit opened at 81.74 against the dollar and reached an early high of 81.67 in first deals.
However, the local unit offset initial gains and eventually ended the day at 81.88 (preliminary), 7 paise lower than the previous close.
On Monday, the rupee was settled at 81.81 against the dollar.
The dollar index, which measures the dollar’s strength against a basket of six currencies, rose 0.12 percent to 101.46.
Brent oil futures, the global oil benchmark, fell marginally 0.18 percent to USD 82.59 a barrel.
“In the wake of a strong transfer of Western and Asian currencies, the Indian rupee opened a gap, but RBI could have intervened in the market along with dollar demand from hedgers that wiped out gains,” said Dilip Parmar, research analyst at HDFC Securities.
Foreign fund inflows and a weaker dollar are likely to benefit the rupee, but a sharp appreciation may not be appropriate if we hold a large amount of foreign exchange reserves ($600 billion), Parmar said.
On the domestic stock market, the 30-stock BSE Sensex closed 29.07 points or 0.04 percent lower at 66,355.71. The broader NSE Nifty rose 8.25 points, or 0.04 percent, at 19,680.60.
Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday as they sold shares worth Rs 82.96 crore, according to exchange data.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – PTI)