The rupee settled flat at 83.26 (provisional) against the US dollar on Tuesday as weak domestic equity markets and sustained foreign fund outflows weighed on investor sentiments.
However, a decline in crude oil prices supported the local currency amid geopolitical tensions in the Middle East, forex traders said.
At the interbank foreign exchange, in a range-bound trade, the rupee opened at 83.26 and finally settled at the same level as the American currency.
During the day, the rupee witnessed range-bound trade, it saw an intra-day high of 83.25 and a low of 83.27 against the greenback.
On Monday, the rupee traded on a flat note and settled 1 paisa lower at 83.26 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.07 per cent at 106.04.
Brent crude futures, the global oil benchmark, rose 0.90 per cent to USD 88.24 per barrel.
"We expect the rupee to trade with a slight negative bias on geopolitical uncertainty in the Middle East which may lead to safe-haven demand for US Dollar. Month-end Dollar demand from Oil Marketing Companies (OMCs) may also weigh on Yen," Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas said.
However, the delayed ground invasion may support riskier currencies at lower levels, Choudhary said.
"Traders may take cues from India's fiscal deficit and US CB consumer confidence data. Investors may remain cautious ahead of the FOMC meeting later this week. USD/INR spot price is expected to trade in a range of Rs 83 to Rs 83.60," he said.
On the domestic equity market front, the BSE Sensex closed 237.72 points or 0.47 per cent lower at 63,874.93. The broader NSE Nifty declined 61.30 points or 0.32 per cent to 19,079.60.
According to exchange data, Foreign Institutional Investors (FIIs) were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,761.86 crore.