MUMBAI: The rupee snapped the four-day losing streak and appreciated 12 paise to settle at 90.18 (provisional) against the American currency on Tuesday, tracking a decline in the US dollar index.
Forex traders said weak domestic equity markets and geopolitical tensions between the US and Venezuela capped sharp gains for the domestic unit.
At the interbank foreign exchange, the rupee opened at 90.22 against the US dollar and traded in the range of 90.08-90.25 before settling at 90.18 (provisional), up 12 paise from its previous close.
On Monday, the rupee closed 10 paise lower at 90.30 against the US dollar.
"We expect the Rupee to trade with a negative bias on risk aversion in global markets emanating out of geopolitical tensions between the US and Venezuela. Surge in crude oil prices and FII outflows may further pressurise the Rupee," said Anuj Choudhary, Research Analyst, Commodities Research, Mirae Asset Sharekhan.
However, a weak Dollar amid disappointing US economic data and any intervention by the RBI may support the rupee at lower levels, Choudhary added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent lower at 98.21 after the US ISM Manufacturing PMI came in below expectations.
Brent crude, the global oil benchmark, was trading 0.47 per cent higher at USD 62.05 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex declined 376.28 points to settle at 85,063.34, while the Nifty was down 71.60 points to 26,178.70.
Foreign institutional investors offloaded equities worth Rs 36.25 crore on Monday, according to exchange data.
On the domestic macroeconomic front, India's services sector growth moderated in December, as the rates of expansion in incoming new work and output eased to the slowest in 11 months, and companies refrained from recruiting additional staff, a monthly survey said on Tuesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.8 in November to 58.0 in December, indicating the slowest rate of expansion since January 2025.