Rupee stayed in a narrow range and settled 3 paise lower at 83.82 (provisional) against the US dollar on Tuesday amid subdued equity markets, unabated outflow of foreign funds and strengthening American currency.
However, crude oil prices sliding to near $70 per barrel helped the local unit resist a steep fall, forex traders said.
At the interbank foreign exchange, the local unit opened at 83.81 and moved between the low of 83.83 and high of 83.80 against the greenback during the session.
The unit finally settled at 83.82 (provisional), registering a loss of 3 paise from its previous closing level.
On Monday, the rupee settled 10 paise lower at 83.79 against the American currency.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee declined on weak domestic markets and disappointing macroeconomic data.
"A recovery in US dollar also weighed on the domestic unit. However, weak crude oil prices cushioned the downside," he said, adding that the FII outflows may also weigh on the domestic unit.
"Traders may take cues from ISM manufacturing PMI and JOLTS (Job Openings and Labor Turnover Survey) data from the US. Investors may watch out for non-farm payrolls report from the US this week. USD-INR spot price is expected to trade in a range of ₹83.65 to Rs 84," Choudhary said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.27 per cent to 100.79.
Brent crude, the international benchmark, declined 1.70 per cent to 70.48 in futures trade.
On the domestic equity market front, the Sensex fell 33.49 points, or 0.04 per cent, to settle at 84,266.29, while the Nifty slipped 13.95 points, or 0.05 per cent to close the session at 25,796.90.
A monthly survey released on Tuesday showed India's manufacturing sector growth fell to an eight-month low in September amid softer increase in factory production, sales and new export orders.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) fell from 57.5 in August to 56.5 in September, registering the weakest pace of growth since January.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth Rs 9,791.93 crore, according to exchange data.
Meanwhile, official data released on Monday showed that the government's fiscal deficit -- the gap between expenditure and revenue -- at the end of the first five months of the current financial year touched 27 per cent of the full-year target.
Also, the Reserve Bank of India data on Monday revealed the country's current account deficit widened marginally to $9.7 billion or 1.1 per cent of GDP in April-June 2024, as against $8.9 billion or 1 per cent in the year-ago period.
The growth in production of eight key infrastructure sectors also entered a negative zone after three-and-a-half years, contracting 1.8 per cent in August 2024 due to decline in output of coal, crude oil, natural gas, refinery products, cement and electricity, according to another official data released on Monday.