The rupee witnessed range-bound trade in the morning session on Tuesday and depreciated 3 paise to 83.57 against the US dollar, amid a muted trend in domestic equities and rising crude oil prices.
Forex traders said the rupee continues to hold steady within a well-defined range on active intervention by the Reserve Bank of India (RBI).
At the interbank foreign exchange market, the local unit moved in a narrow range. It opened at 83.54 against the American currency, then fell to 83.57, registering a fall of 3 paise over its previous close.
On Monday, the rupee pared its early gains to close lower by 2 paise at 83.54 against the US currency.
The Indian rupee reached a two-month high before retreating all its gains to dollar buying by the Reserve Bank taking it back to 83.55 level.
"On Tuesday, the opening was almost flat within a range of 83.40 to 83.65 with the market looking at what the RBI will do to control the appreciation," said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.07 per cent to 100.92 points.
Brent crude, the international benchmark, was trading higher by 0.91 per cent to $74.57 per barrel in futures trade.
On the domestic equity market, the 30-share BSE Sensex appreciated 61.22 points, or 0.07 per cent, to 84,989.83, while the Nifty was up 22.20 points, or 0.09 per cent, to 25,961.25 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth ₹404.42 crore, according to exchange data.