Rupee fell 2 paise to 83.81 against the US dollar in early trade on Tuesday, tracking massive outflow of foreign funds amid volatile global markets.
Forex traders said the Indian unit was weighed down by a strengthening American currency against major rivals, though a retreating crude oil prices and recovery in domestic equity markets resisted a steep fall in the rupee.
They said monetary and fiscal stimulus announced by China triggered the withdrawal of foreign funds as investors preferred better-performing Chinese markets.
At the interbank foreign exchange, the local unit opened at 83.81 against the greenback, registering a loss of 2 paise from its previous closing level.
On Monday, the rupee settled 10 paise lower at 83.79 against the American currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.02 per cent to 100.54.
Brent crude, the international benchmark, declined 0.29 per cent to 71.77 in futures trade.
On the domestic equity market front, the Sensex climbed 251.03 points or 0.30 per cent to 84,550.81, while the Nifty rose 63.40 points or 0.25 per cent to 25,874.25. Both the indices tumbled nearly 1.5 per cent on Monday.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth ₹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 data released on Monday showed 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.