The rupee pared initial gains and settled for the day lower by 3 paise at 95.74 (provisional) against the US dollar on Monday, on a positive American currency and weak domestic markets.
Forex traders said the USD/INR pair traded in a narrow range as rising Brent crude prices, persistent importer demand, and cautious sentiment over new US sanctions targeting Iran weighed on investor sentiment.
At the interbank foreign exchange, the rupee opened at 95.65, then touched an intraday high of 95.64 and a low of 95.75 and finally settled for the day at 95.74 (provisional) against the greenback, lower by 3 paise from its previous close.
On Friday, the rupee settled higher by just 3 paise at 95.71 against the US dollar.
"We expect the rupee to trade with a slight negative bias on uncertainty between the US and Iran. Elevated crude oil prices may also weigh on the rupee. However, overall weakness in the US dollar on declining odds of a rate hike may support the rupee at lower levels. USDINR spot price is expected to trade in a range of 95.50 to 96," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 98.98, higher by 0.18 per cent.
Brent crude, the global oil benchmark, was trading lower by 1.62 per cent at $92.86 per barrel in futures trade.
On the domestic market front, Sensex fell 171.72 points to settle at 77,369.11, while the Nifty declined 32.95 points to 24,219.05.
Foreign institutional investors offloaded equities worth ₹542.71 crore on a net basis on Friday, according to exchange data.
India's forex reserves jumped $9.905 billion to $716.907 billion during the week ended August 14, the Reserve Bank of India (RBI) said on Friday.
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