Forex traders said the rupee saw modest gains in initial trade on foreign inflows, but a negative trend in domestic equities and rising crude oil prices weighed on investor sentiment.

At the interbank foreign exchange market, the rupee opened at 94.40 against the US dollar. During the day, the local unit touched an intraday high of 94.38 and a low of 94.50. The rupee finally settled at 94.50 (provisional), down 7 paise from its previous close.

On Friday, the rupee settled higher by 8 paise at 94.43 against the US dollar.

"The Indian rupee traded flat to positive on foreign inflows and a soft dollar. However, a weak tone in domestic markets and a surge in crude oil prices capped sharp gains," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.

According to Choudhary, the rupee is likely to trade with a positive bias on optimism over foreign inflows and a weak dollar.

"Iran said that the deal with Oman regarding the Strait of Hormuz is in its final stages. This may ease crude oil prices, which may further support the rupee. However, tensions between the US and Iran may continue to pressurise the rupee at higher levels. Investors may now focus on inflation data from the US and India," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 98.90, lower by 0.27 per cent.

Brent crude, the global oil benchmark, was trading higher by 0.58 per cent at USD 96.84 per barrel in futures trade.

On the domestic equities market front, Sensex dropped 382.62 points to settle at 76,132.81, while Nifty fell 118.55 points to 23,779.15.