The rupee paired all its early gains to settle 1 paisa lower at 83.17 against the US dollar on Wednesday, tracking negative cues from domestic equity markets and a strong greenback overseas amid geopolitical tensions in the Middle East.
Softening crude oil prices and some buying by foreign equity investors, however, supported the Indian currency, forex dealers said.
At the interbank foreign exchange market, the local unit opened 8 paise up at 83.08 and traded between the peak of 83.08 and the lowest level of 83.19 against the greenback. It finally settled at 83.17 against the dollar, registering a loss of just 1 paisa from its previous close.
On Monday, the rupee closed 4 paise lower at 83.16 against the US dollar. Forex markets were closed on Tuesday on account of Dussehra.
The local unit lost early gains as selling pressure emerged in the capital markets. This resulted in the rupee weakening throughout the day.
"The rupee's trading dynamics continue to be marked by volatility, influenced by various factors. RBI intervention in the 83.20-83.30 range, along with broader resistance near 83.00 driven by dollar strength and ongoing geopolitical tensions in the Middle East, is shaping the rupee's performance," Trivedi said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.20 per cent higher at 106.48.
Global oil price benchmark Brent crude advanced 0.20 per cent to USD 88.25 per barrel.
On the domestic equity market front, Sensex tumbled 522.82 points or 0.81 per cent to settle at 64,049.06. The Nifty tanked 159.60 points or 0.83 per cent to 19,122.15.
Foreign Institutional Investors sold equities worth Rs 4,236.60 crore on Monday, according to exchange data.
"Market participants will closely monitor these factors and market developments to gauge potential shifts in currency values in the coming sessions," according to Trivedi.