The rupee recovered early losses to close flat at 79.84 against the US dollar on Monday amid a strong greenback overseas and massive sell-off in equities.
However, lower crude oil prices supported the local unit, forex dealers said.
At the interbank foreign exchange market, the local currency opened weak at 79.90 and moved in a range of 79.78 to 79.92 during the session. It finally settled unchanged at 79.84 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.20 per cent to 108.38.
Meanwhile, Brent crude futures, the global oil benchmark, declined 0.81 per cent to USD 95.94 per barrel.
On the domestic equity market front, the BSE Sensex ended 872.28 points or 1.46 per cent lower at 58,773.87, while the broader NSE Nifty fell 267.75 points or 1.51 per cent to 17,490.70.
Foreign institutional investors (FIIs) offloaded shares worth a net Rs 453.77 crore on Monday, according to provisional data.
"With the euro trading at parity again and the pound below the USD 1.18 handle, momentum suggests that the greenback could soon cross the recent high of 109.29.
"Looking ahead, the traders may look to trim long exposure closer to Federal Reserve Chair Jerome Powell's speech at Jackson Hole, given the recent rally and the risk that his comments leave room for a policy pivot in the coming months," said Dilip Parmar, Research Analyst, HDFC Securities.
The medium-term outlook for the spot USD/INR remains bullish, yet short-term position rebalancing could take over in the coming sessions. The pair is having support at 79.25 and resistance at 80.06, Parmar added.
