The rupee fell 5 paise to settle at 85.73 (provisional) against the US dollar on Tuesday, as higher crude oil prices and outflow of foreign funds continued to weigh on the local unit.
Forex traders said the rupee pared some of its intraday losses as the American currency retreated from its elevated levels. Moreover, the recovery in the domestic equity market also aided sentiments.
At the interbank foreign exchange, the rupee opened at 85.77, touched the day's peak of 85.65 and hit an intraday low of 85.80 against the greenback. The unit settled at 85.73 (provisional) against the dollar, registering a fall of 5 paise from its previous close.
On Monday, the rupee settled 11 paise higher at 85.68 against the dollar. During intraday, the unit had hit the lowest-ever level of 85.84 against the American currency.
"We expect the rupee to trade with a negative bias on FII outflows and underlying strength in the US dollar amid expectations of no rate cut by Fed in January. However, any extended recovery in the domestic markets may support rupee at lower levels.
"Traders may take cues from ISM services PMI, trade balance and JOLTS jobs data from the US. USD-INR spot price is expected to trade in a range of Rs 85.50 to Rs 85.90," Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.30 per cent lower at 107.92, amid disappointing US services PMI and factory orders data, while President-elect Donal Trump dismissed rumours over stringent trade tariffs.
