The rupee pared its early losses to close almost flat at 73.34 (provisional) against the US dollar on Tuesday amid a lacklustre trend in the domestic equity markets.
At the interbank forex market, the local unit opened lower at 73.47 against the greenback and declined to the day's low of 73.53.
The rupee later cut losses and finally ended at 73.34, registering a rise of 1 paisa over its previous close of 73.35 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07 percent to 90.14.
On the domestic equity market front, the BSE Sensex ended 340.60 points or 0.69 percent lower at 49,161.81, while the broader NSE Nifty declined 91.60 points or 0.61 percent to 14,850.75.
Forex traders said concerns over rising COVID-19 cases weighed on investors' sentiment.
New cases of coronavirus in India fell to 3.29 lakh after 14 days taking the total tally of COVID-19 infections to 2,29,92,517, according to the Union Health Ministry data updated on Tuesday.
Foreign institutional investors (FIIs) remained net buyers in the capital markets, as they purchased shares worth Rs 583.69 crore on Monday, as per provisional data.
Brent crude futures, the global oil benchmark, fell 0.66 percent to $67.87 per barrel