The rupee settled for the day lower by 6 paise at 83.56 (provisional) against the US dollar on Tuesday, weighed down by a muted trend in domestic equities and the strength of the American currency in overseas markets.
Forex traders said the US dollar strengthened due to increased demand from oil importers and stronger-than-expected economic data from the US. Moreover, elevated crude oil prices also weighed on the local unit.
At the interbank foreign exchange, the local unit opened at 83.49 and saw an intra-day low of 83.58 and finally settled for the day lower by 6 paise at 83.56 (provisional) against the American currency.
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On Monday, the rupee settled lower by 10 paise at 83.50 against the US dollar.
"We expect the rupee to trade with a slight negative bias on the strong US dollar and elevated crude oil prices. However, positive global markets and fresh foreign inflows may support the rupee at lower levels," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.
Traders may remain cautious ahead of the inflation data from India and the US. Investors are also likely to stay cautious ahead of the Federal Open Market Committee (FOMC) meeting outcome, he said.
Fed is expected to keep its monetary policy unchanged, Choudhary said, adding that the USD-INR spot price is expected to trade in a range of Rs 83.30 to Rs 83.80.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.25, higher by 0.10 per cent.