Snapping its three-day losing streak, the rupee on Tuesday recovered 13 paise to close at 71.85 against the US dollar amid easing crude oil prices and weakening of the American currency in the overseas market.
Forex traders said while weak dollar and easing crude oil prices supported the rupee, losses in domestic stocks and foreign fund outflows weighed on the local unit restricting its upmove.
At the interbank foreign exchange market, the local currency opened on a positive note at 71.84 and moved in a range of 71.78 to 71.90 to the US dollar.
The local currency settled higher by 13 paise at 71.85, cutting short its three-day losing run, according to market data.
The rupee in the past three sessions had lost 0.88 per cent to slide to around three-month lows as coronavirus outbreak posed threat to global trade and growth.
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"Rupee started the day strong on back of firm opening of stocks, selling by exporters and a weak dollar," said Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities.
Also, market regulator Sebi on Tuesday said foreign investors from Mauritius will continue to be eligible for FPI registration with increased monitoring as per international norms.
A significant percentage of FPIs investing in the Indian market is registered in Mauritius.
Forex traders said that investor sentiment, however, remained fragile amid concerns over the impact of coronavirus outbreak on global economy.
The total number of casualties owing to coronavirus stood at 2,663, with 71 new coronavirus deaths from China. According to a daily report released by the National Health Commission (NHC) on Tuesday, the number of confirmed cases has reached 77,658, a jump of 508 cases.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.02 per cent to 99.33.
The 10-year Indian government bond yield was at 6.33 per cent.
Meanwhile, the Brent crude fell 0.27 per cent to trade at USD 56.15 per barrel.
On the domestic equity market front, after oscillating over 300 points during the day, the 30-share BSE gauge finally settled 82.03 points, or 0.20 per cent, lower at 40,281.20.
Similarly, the broader NSE Nifty declined 31.50 points or 0.27 per cent to 11,797.90.
Foreign institutional investors sold equities worth 2,315.07 crore on a net basis on Tuesday, according to provisional exchange data.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.8522 and for rupee/euro at 77.7340. The reference rate for rupee/British pound was fixed at 92.9485 and for rupee/100 Japanese yen at 64.40.
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