The rupee witnessed a range-bound trading in early trade on Tuesday as concerns about the US Fed and firm crude oil prices offset the support of the overnight weakness of the American currency.
The rupee opened against the dollar at 79.73 and moved in a narrow range. It reached an early low of 79.79 in initial deals.
The rupee was close to 79.78 against the US dollar on Monday, up by 12 paise.
On Tuesday morning, the rupee opened marginally stronger, tracking the overnight weakness of the dollar, according to traders. The local unit was weighed down by the muted domestic equities and foreign fund outflows.
Sriram Iyer, Senior Research Analyst at Reliance Securities said investors will wait for new triggers this week from the US Fed event and could refrain from taking large positions.
Iyer noted that appreciation bias could be kept capped by higher oil prices, global growth fears and a hawkish Fed.
Experts believe that the dollar may bounce back on expectations of a hawkish US Fed and an aggressive rate hike in the Federal Open Market CommitteeFederal Open Market Committee FOMC meeting later this week.
On the domestic equity front, the Sensex was trading 330.79 points or 0.59 per cent lower at 55,435. The broader NSE Nifty fell 100.15 points or 0.6 per cent to 16,530, while the NSE Nifty fell 100.15 points or 0.6 per cent. The dollar index, which gauges the strength of the dollar against a basket of six currencies, fell 0.10 per cent to 106.37.
The global oil benchmark Brent crude futures rose 1.31 per cent to USD 106.61 per barrel.
Foreign institutional investors offloaded shares worth Rs 844.78 crore, as per exchange data.