The rupee gave up all its intra-day gains to settle 6 paise lower at 72.43 (provisional) against the US dollar on Tuesday, in line with weakness in other peers against the American currency.
However, easing crude oil prices and positive equities lent some support to the local unit and restricted the fall.
At the interbank forex market, the rupee opened flat at 72.37 a dollar. During the session, it witnessed an intra-day high of 72.27 and a low of 72.45.
It finally settled 6 paise lower at 72.43 against the American currency.
In the previous session, the rupee had settled at 72.37 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.42 per cent to 92.12.
"Indian rupee depreciated on a strong dollar. Further, traders remained cautious ahead of US Federal Reserve Chairman Powell and US Treasury Secretary Yellen testimony before the Committee on Financial Services, US House of Representatives.
"However, sharp fall was prevented on a rise in risk appetite in the domestic markets and softening of crude oil prices. Crude oil prices fell on worries that the slow pace in vaccination programme and the risk of new lockdowns in Europe may hamper economic growth. Rupee may trade in the range of 72.0 to 72.75 in the next couple of sessions," Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas, said.
Meanwhile, global oil benchmark Brent crude futures fell 3.03 per cent to USD 62.66 per barrel.
On the domestic equity market front, the BSE Sensex surged 280.15 points or 0.56 per cent to close at 50,051.44, while the broader NSE Nifty ended higher by 78.35 points or 0.53 per cent at 14,814.75.
Foreign institutional investors were net sellers in the capital market on Monday as they sold shares worth Rs 786.98 crore, as per exchange data.