The rupee continued to trade in a narrow range, settling on Tuesday at 87.72 (provisional) against the US dollar, just 3 paise higher.
Forex traders said the domestic unit consolidated in a narrow range amid a negative trend in domestic equities as investors await the US CPI inflation data that will be out in the US on Tuesday.
Trading in the domestic markets was also highly volatile and foreign fund outflows continued, capping any sharp gains for the local unit.
While the US-Russia talks on August 15 may be a game-changer for ongoing global trade wars, there was an overall negative bias as the India-US trade talks fell last week.
Also Read: Rupee declines 5 paise to 87.63 against US dollar
At the interbank foreign exchange, the domestic unit opened at 87.70 and moved in a range of 87.59-87.72 during the day before settling at 87.72 (provisional), just 3 paise higher than its previous close.
On Monday, the domestic unit closed at 87.75 against the US dollar.
"We expect the rupee to trade with a negative bias on account of the ongoing trade tariff war between India and the US. Sustained FII outflows may also pressurise the rupee,” said Anuj Chaudhary, Research Analyst Commodities and Currencies, Mirae Asset Sharekhan.
"However, weakness in the US Dollar and declining crude oil prices may support the rupee at lower levels. Investors now focus on the US and Indian inflation data this week. USD/INR spot price is expected to trade in a range of 87.40 to 87," he added.
Meanwhile, Brent crude prices rose 0.41 per cent to USD 66.70 per barrel in futures trade.
The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.04 per cent to 98.55.
On the domestic equity market front, Sensex dropped 368.49 points to settle at 80,235.59, while Nifty declined 97.65 points to close at 24,487.40.
Foreign Institutional Investors offloaded equities worth ₹1,202.65 crore on Monday, according to exchange data.
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