Mumbai: The rupee witnessed range-bound trading against the US dollar in early trade on Tuesday, as the support from positive domestic equities was negated by the strength of the American currency in the overseas market.
Forex traders said the strong US dollar and elevated crude oil prices also weighed on the local unit and restricted the upmove.
At the interbank foreign exchange market, the local unit opened at 83.46 and gained further to trade at 83.44 against the greenback in initial deals, registering an increase of 3 paise from its previous closing level.
On Monday, the rupee appreciated 10 paise to settle at 83.47 against the US dollar.
"Indian rupee gained on Monday as the dollar index fell and the Reserve Bank of India (RBI) protected it from a fall beyond 83.55. The rupee is expected to be resisted near 83.40 levels and RBI will keep supporting it near to 83.55 levels," said Anil Kumar Bhansali Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading marginally lower by 0.04 per cent at 105.42.
Brent crude futures, the global oil benchmark, were trading at $86.01 per barrel.
In the domestic equity market, the 30-share BSE Sensex advanced 237.00 points, or 0.31 per cent, to 77,578.08 points. The broader NSE Nifty rose 69.50 points, or 0.3 per cent, to 23,607.35 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 653.97 crore, according to exchange data.
On the domestic macroeconomic front, S&P Global Ratings on Monday retained India's GDP growth forecast for the current financial year at 6.8 per cent and said high interest rates and lower fiscal spur would temper demand.
Moreover, India recorded a current account surplus of $5.7 billion or 0.6 per cent of GDP in the March quarter, the Reserve Bank of India said on Monday.