The rupee pared its early gains and settled 21 paise down at 73.60 (provisional) against the US dollar on Monday, tracking muted domestic equities and a rebound in the American currency. Forex traders said border tensions between India and China dampened investor sentiment.
At the interbank forex market the domestic unit witnessed highly volatile trade. It opened on a strong note at 73.26, but lost ground during the day and finally ended at 73.60 against the greenback, down 21 paise over its previous close of 73.39.
During the trading session, the local unit witnessed an intra-day high of 73.25 and a low of 73.80 against the US dollar.
"The Indian rupee depreciated against the US dollar amid concerns over escalating geopolitical tensions between India and China," said Sriram Iyer, Senior Research Analyst, Reliance Securities.
In a fresh incident in eastern Ladakh, the Chinese army carried out "provocative military movements" to "unilaterally" change the status quo on the southern bank of Pangong Tso lake but the attempt was thwarted by the Indian troops, the Army said on Monday.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.09 per cent higher at 92.45.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 745.60 points lower at 38,721.70 and broader NSE Nifty declined 228.60 points to 11,419.00.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,004.11 crore on Friday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, rose 1.40 per cent to $46.45 per barrel.