The rupee pared its initial losses to settle flat at 76.18 (provisional) against the American currency on Tuesday, tracking a positive trend in domestic equities.
At the interbank foreign exchange, the rupee opened sharply lower at 76.39 against the US dollar. However, it recovered all its losses to closed at 76.18.
During the day, the local unit witnessed heavy volatility amid concerns over global oil supplies and saw an intra-day high of 76.10 and a low of 76.48.
On Monday, the rupee slumped 34 paise to close at 76.18 against the US dollar.
Experts believe the volatility will persist till the war situation between Russia and Ukraine and crude price stabilize.
Global oil benchmark Brent crude futures fell 1.50 percent to $113.18 per barrel.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.25 percent to 98.74.
On the domestic equity market front, the 30-share Sensex ended 696.81 points or 1.22 percent higher at 57,989.30, while the broader NSE Nifty advanced 197.90 points or 1.16 percent to 17,315.50.
Foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth Rs 2,962.12 crore, according to stock exchange data.
(With inputs from PTI)