The Indian rupee on Tuesday dropped 7 paise to close at 71.01 against the US dollar as foreign fund outflows and subdued equities weakened forex market sentiment.
However, easing crude oil prices and weaker greenback against rival currencies restricted the rupee fall to some extent.
Foreign investors pulled out Rs 828.49 crore from Indian equities on Tuesday, according to exchange data.
At the interbank foreign exchange market, the local unit opened on a strong note at 70.72, then lost ground and fell to an intra-day low of 71.05 against the American currency.
The domestic unit finally settled for the day at 71.01 against the US dollar, down 7 paise over its previous close.
On Monday, the local unit settled unchanged at 70.94 against the US dollar.