The Indian rupee retraced early losses to settle 12 paise higher at 71.70 against the US dollar, tracking late recovery in domestic equities, in an otherwise gloomy global market conditions reeling under heightened US-Iran tensions.
At the foreign bank exchange, the domestic unit opened significantly lower at 72.05 per dollar as against the previous day's close of 71.82. During the day, it traded in the range of 72.07 and 71.69 to the US currency.
Tracking worsening US-Iran tussle, crude benchmark Brent was trading lower at USD 68.34 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.12 per cent to 97.12.
The 10-year government bond yield was at 6.56 per cent.
"Rupee traded in range of 71.87-72.11 a gap down opening on news of Iranian missile attacks on US base military bases in Iran/Iraq to take revenge on US was witnessed but it seemed short lived as rupee started traded stronger after gap down opening," Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, said.
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Exporters seemed to participate in around the 72 levels and the levels of 72-72.25 will keep acting as a crucial barrier for USD/INR pair whereas 71.60-71.40 as supports, he said.
On the equities front, the BSE Sensex settled 51.73 points, or 0.13 per cent, down at 40,817.74. The index had plunged nearly 400 points in early session.
While, the NSE Nifty closed 27.60 points, or 0.23 per cent, lower at 12,025.35.
According to HDFC Securities, "Higher international gold price and weaker rupee supported domestic gold prices to trade higher."