The rupee depreciated 4 paise to close at 83.36 (provisional) against the US dollar on Thursday, tracking elevated American currency in the overseas market and a muted trend in domestic equities.
Forex traders said the rupee traded in a narrow range as the support from easing crude oil prices was negated by strong dollar demand from importers.
At the interbank foreign exchange market, the local unit opened at 83.36 and touched a low of 83.37 against the greenback. It finally settled at 83.36 (provisional) against the dollar, down by 4 paise from its previous close.
On Wednesday, the rupee appreciated by 5 paise and settled at 83.32 against the greenback.
"Indian rupee traded on a flat note on Thursday. A positive US Dollar and weak domestic markets weighed on the rupee. However, weak crude oil prices and FII inflows supported the rupee at lower levels," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.
The rupee is expected to trade with a slight negative bias on positive tone in the US Dollar and risk aversion in global markets, Choudhary added.
"However, a weak tone in crude oil prices and foreign inflows may support the rupee at lower levels. Traders may take cues from US weekly unemployment change and Challenger job cuts data. Investors may remain cautious ahead of the RBI's monetary policy decision on Friday," he said.
The Reserve Bank is likely to maintain the status quo on the short-term interest rate in its monetary policy review.
RBI Governor Shaktikanta Das-headed Monetary Policy Committee (MPC) is scheduled to begin its three-day deliberations on December 6. Das will unveil the decision of the six-member MPC on December 8.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.28 per cent lower at 103.86.
Brent crude futures, the global oil benchmark, advanced 1.02 per cent to USD 75.08 per barrel.
On the domestic equity market front, Sensex declined 132.04 points, or 0.19 per cent, to settle at 69,521.69 points. The Nifty declined 36.55 points, or 0.17 per cent, to 20,901.15 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 79.88 crore, according to exchange data.