The rupee depreciated 14 paise to 81.92 against the US dollar in early trade on Tuesday, tracking the strength of the American currency in the overseas market.
Forex traders said factors like significant foreign fund inflows, positive domestic equities supported the local unit and restricted the downslide.
At the interbank foreign exchange, the domestic unit opened weak at 81.84 against the dollar, then fell to 81.92, registering a decline of 14 paise over its last close.
On Monday, the rupee settled at 81.78 against the dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.07 per cent to 101.44.
Oil prices fell on Tuesday after strong gains in the last two sessions as traders remain cautious ahead of US inflation figures for April 2023 that will be the main factor in the Federal Reserve's decision to hike interest rates. Brent Crude futures on Tuesday were trading at $76.70 per barrel down by 31 cents and US West Texas Intermediate crude futures were at $72.87 per barrel with a gain of 29 cents.
"The US inflation data is due tomorrow, which would clear the fog on whether the Fed must do more to rein in inflation. For now, the DXY would remain supported around the 100.50-100.80 zone and any upward surprise on the inflation would pull the fiat above 102.50 levels," CR Forex Advisors MD Amit Pabari said.
Pabari further said that the consolidation phase could continue for a couple of sessions more but the pair is on the verge of a breakout and most likely on the upside towards 82.50-82.80 levels.
The markets on Tuesday opened in green with Sensex at 61,868.74, up by 104.49 points and Nifty rose by 34.55 points at 18,298.95. Hindustan Unilever, IndusInd Bank, Tata Steel, Tata Motors and Titan were the top gainers whereas Sun Pharma, ITC, Bajaj Finance, Infosys and HCL Tech were the top losers.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday as they purchased shares worth Rs 2,123.76 crore, according to exchange data.
With inputs from Agencies
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