The Indian rupee opened on a cautious note and fell 5 paise to 71.23 against the US dollar in early trade on Tuesday amid sustained rise in crude oil prices and muted opening in domestic equities.
Forex traders said the rupee is trading in a narrow range amid lack of cues from the global market.
At the interbank foreign exchange, the rupee opened at 71.22 then fell to 71.23 against the dollar, showing a decline of 5 paise over its previous closing.
The Indian rupee on Monday had closed at 71.18 against the dollar.
Traders said rise in crude oil prices weighed on the domestic unit, while sustained foreign fund inflows supported the rupee and restricted the fall.
Meanwhile, brent crude futures, the global oil benchmark, fell marginally by 0.03 per cent to USD 66.37 per barrel.
Foreign institutional investors (FIIs) remained net buyers in the capital markets, as they purchased shares worth Rs 1,463.28 crore on Monday, as per provisional data.
Domestic bourses opened on a muted note on Tuesday with benchmark indices Sensex trading 8.69 points up at 41,651.35 and Nifty higher by 7.15 points at 12,269.90.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.03 to 97.68.
The 10-year government bond yield was at 6.57 in morning trade.
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