The rupee depreciated by 4 paise to 82.67 against the US dollar in early trade on Tuesday, tracking a strong American currency against major rivals overseas.
Forex traders said downward movement in crude price and inflows of foreign funds, however, capped the fall in the Indian currency.
Meanwhile, the dollar strengthened as investors were upbeat on the tentative agreement between US President Joe Biden and Republican House Speaker Kevin McCarthy on the debt ceiling, which is likely to face voting on Wednesday before getting sealed.
Traders were also keeping an eye on the US non-farm payroll (NFP) data to be released on Friday.
"Rupee traded in a narrow range and volatility remained low as most market participants remained on the sidelines following the US market holiday. On the other hand, the dollar was weighed down after preliminary talks between the Republicans and Democrats sailed through.
"Today, focus will be on the consumer confidence number from the US and that is likely to trigger volatility for the dollar; more updates on the debt ceiling vote will also be important to watch. We expect the USDINR (Spot) to trade sideways and quote in the range of 82.40 and 82.80," said Gaurang Somaiya, FX and bullion analyst at Motilal Oswal.
At the interbank foreign exchange, the domestic unit opened flat at 82.63 against the dollar and hit the lowest level of 82.69. Later, it touched 82.67, registering a fall of 4 paise over its previous close.
On Monday, the rupee closed at 82.63 against the US currency.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.09 per cent to 104.30.
Oil prices
Oil prices on Tuesday continued to rise as United States leaders reached a tentative decision to avoid debt default and amid fears of further interest rate hike. This is in addition to the fear that the OPEC+ will leave the output quotas unchanged. Brent crude futures went up by 35 cents to $77.42 per barrel and US West Texas Intermediate crude was at $73.20 per barrel with a gain of 53 cents.
Domestic Markets
The markets on Tuesday were relatively flat with Sensex at 62,784, down by 62.38 points and Nifty was at 18,590.30 with a drop of 8.35 points. HCL Tech, ITC, Titan, Kotak Bank and Wipro were the top gainers whereas HDFC Bank, L&T, Asian Paints, IndusInd Bank and Maruti were the top losers.
Foreign Institutional Investors (FIIs) were net buyers in the capital market on Monday as they purchased shares worth Rs 1,758.16 crore, according to exchange data.
With inputs from Agencies.
