The rupee pared its initial gains and closed down by 12 paise at 73.42 (provisional) against the US currency on Tuesday amid concerns that rising COVID-19 cases and subsequent lockdowns in some states may hurt the economic recovery.
At the interbank forex market, the local unit opened at 73.22 against the greenback and traded in the range of 73.20 to 73.42 during the day.
The rupee finally ended at 73.42 against the American currency, registering a fall of 12 paise over its previous closing of 73.30.
The daily rise in new coronavirus infections in India remained above 90,000 for the third consecutive day taking the nationwide COVID-19 tally of cases to 1,26,86,049, according to the Union Health Ministry data updated on Tuesday.
Forex traders said rising crude oil prices and strengthening of the American currency in the overseas market also weighed on investors' sentiment.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 per cent to 92.71.
Brent crude futures, the global oil benchmark, were trading 2.37 per cent up at USD 63.62 per barrel.
On the domestic equity market front, the BSE Sensex ended 42.07 points or 0.09 per cent higher at 49,201.39, while the broader NSE Nifty advanced by 45.70 points or 0.31 per cent to 14,683.50.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth Rs 931.66 crore on Monday, according to exchange data.
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