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The rupee fell on likely dollar outflows from foreign institutional investors. The unit is trading at 61.90/91 versus 61.73/74 close on Monday.
The USD/INR pair may remain supported ahead of Reserve Bank of India's meeting on Wednesday where it is likely to raise rates for the third time in four months.
A hike in rates will hurt equities and have a negative impact on rupee.
Dealers also cited outflows related to the unsubscribed portion of the Power Grid share sale.
Foreign investors had placed bids worth $2.7 billion for the share sale.
