Forex traders said the rupee is trading in a narrow range ahead of the release of retail inflation and factory output data. Besides, the weakening of the greenback vis-a-vis other currencies overseas supported the local unit.
At the interbank foreign exchange market, the domestic unit opened on a firm footing at 68.31, but soon pared some gains to trade at 68.33, up 25 paise over its previous close.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 674.26 crore Tuesday, provisional data with the exchanges showed.
The Indian rupee has opened lower by 5 paise amid rising crude oil prices due to US-Iran tensions.
The currency moved only marginally against the dollar in May despite a steep fall in oil prices, the country's major import, and a landslide victory for Prime Minister Narendra Modi's Bharatiya Janata Party, something previous polls had said would be the best outcome for the rupee.
US' decision to remove India from its currency watch list should give an advantage against China and help in increasing bilateral trade with the US.
Foreign investors have ploughed billions of dollars into India ahead of an election process spread over seven phases and ending only toward the end of next month with nearly 900 million people eligible to vote. The process begins on Thursday.
The rupee was the worst performing Asian currency last year but gained over 2 percent in March despite the Reserve Bank of India easing policy in February and expectations for it to do so again later on Thursday.
Last year, the currency tumbled about 10 percent and hit a record low of 74.485 to the dollar in October, marking its worse performance since 2013, driven by a sell-off in emerging markets and a widening fiscal deficit as oil prices rose.
A strengthening dollar ahead of the US-China trade talks and surging crude oil prices, however, restricted the rupee gains.
At the Interbank Foreign Exchange (forex) market, the domestic unit opened strong at 71.06 and rose to 70.91. However, it could not hold on to the gains and fell to a low of 71.29 before finally ending at 71.24 -- a fall of 13 paise.
A positive trend in the global equity markets, which rose on optimism surrounding the ongoing US-China trade talks, also supported the rupee, analysts said.
After reversing some of the deep losses in the final few months of 2018, the Indian rupee has lost about 3 percent so far this year, including nearly 1 percent since the government delivered a populist interim budget on Friday and inflamed concerns about the nation's fiscal deficit.
At the Interbank Foreign Exchange (forex) market, the rupee opened at 71.08, but during the day it came under selling pressure. The local unit moved in a range of 70.94 to 71.39 and finally finished at 71.25 per dollar, down by 17 paise against its previous close.
At the Interbank Foreign Exchange, the Indian currency opened significantly higher but erased the morning gains during the course of the day due to month-end dollar demand from oil importers and shed 22 paise from the day's high.
At the Interbank Foreign Exchange, the rupee opened on a weak note at 71.34 then fell further to 71.36 against the US dollar. The local unit, however, recouped most of its initial losses and settled for the day at Rs 71.12, lower by just 1 paisa over its previous close.
At the Interbank Foreign Exchange, the rupee opened on a weak note at 71.19 then fell further to 71.22 against the US dollar. The local unit, however, erased the initial gains and settled for the day at Rs 71.11, up by just 1 paisa over its previous close.
Also, fresh foreign fund inflows propped up the rupee. However, heavy selling in domestic equity market capped the gains of the local unit to some extent.
On a weekly-basis, however, the Indian currency registered a marginal gain of 2 paise. The rupee had registered losses in the previous two successive weeks.
At the Interbank Foreign Exchange, the rupee opened stronger at 71.29 a dollar against the previous close of 71.33.
Besides, the rupee upmove was supported by weaker greenback against its major rivals, although intense selling in domestic equities impacted traders sentiment, capping gains in the domestic currency value.
At the Interbank Foreign Exchange (forex) market, the rupee opened higher at 71.22 but came under selling pressure. It finally finished at 71.44 per dollar, down by 16 paise against its previous close.
This is the second successive week of loss for the Indian currency. During the week the domestic unit registered a loss of 27 paise. In the previous week, the local unit had slumped by 81 paise.
Besides, liquidity infusion by central banks through open market operations and unveiling a RBI new policy for overseas borrowings, allowing all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs, supported the rupee.
Higher bond yields, which spiked on concerns that the government may over-shoot the fiscal deficit target in an election year, too weighed on the domestic unit, forex traders said.