The rupee declined by 26 paise to 81.68 against the US dollar in early trade on Tuesday due to a rise in crude oil prices and forex outflows.
However, the rupee's losses were constrained by early advances in domestic equity markets and a weak dollar relative to other international currencies.
In comparison to the previous closing of 81.42, the local currency began lower at 81.48 to the dollar. In morning transactions, it fluctuated between 81.48 and 81.68.
The exchange rate for the rupee and the dollar at the interbank foreign exchange was 81.68.
Forex dealers claimed that the local currency is being affected by forex outflows from capital markets. According to them, high crude oil prices are also harming the outlook for the rupee.
On hopes of a recovery in Chinese demand, Brent crude, the benchmark for global oil prices, increased 0.02 percent to USD 88.21 a barrel in Asian trading.
The US dollar index, which shows the strength of the greenback against six world currencies, was down 0.17 per cent at 101.96.
According to exchange data, Foreign Institutional Investors (FIIs) sold shares worth Rs 219.87 crore on Monday, making them net sellers in the capital market.
In this month alone, foreign investors have made a net withdrawal of Rs. 15,236 crore due to the allure of the Chinese markets and worries that the US economy may be ready to face a recession.
With inputs from Agencies.
