According to forex traders, the local currency tumbled mainly on account of foreign fund outflows and the negative trends in the equities market.
Forex traders said the rupee is trading in a narrow range as sustained foreign fund outflows and strength of the American currency in the overseas market weighed on investor sentiments.
An upward trend in the crude oil prices and selling pressure from foreign equity investors continued to weigh on the Indian currency, forex traders said.
Forex traders said sustained foreign fund outflows further dented investor sentiments.
Several factors are in place for the return of stagflation in the world’s largest economy, which could accelerate the decline of the dollar as the world’s reserve currency.
India's inclusion in a major global bond index will open doors to increased foreign investment in the nation's debt market, traders said.
Forex traders said the dollar strengthened post the release of the US inflation number that was reported higher-than-expectation and weighed on the domestic unit.
Forex traders said the rupee is witnessing range-bound trading against the dollar as the support from positive domestic equities was negated by elevated crude oil prices and a firm US dollar.
It opened at 82.92 against the dollar. It touched a low of 82.95 against the American currency in initial trade.
In the initial trade, the rupee also touched a low of 83.00 against the greenback.
At the interbank foreign exchange, the domestic unit opened strong at 82.58, then touched the lowest level of 82.63 against the greenback.
At the interbank foreign exchange market, the local unit opened at 83.07 against the US dollar and moved in a range of 82.93 to 83.09 in the day trade.
A rising dollar, for instance, can cause chaos abroad by drawing investment out of other countries.
The Reserve Bank of India (RBI) stepped in the market to arrest the slide and sold dollars via public sector banks, which helped the local currency to stabilise.
Foreign fund inflows and softening crude prices, however, supported the Indian currency even as investors were awaiting India's industrial output number, to be released later in the day, said analysts
Forex traders said the rupee appreciated tracking a weak tone in the US dollar.
At the interbank foreign exchange, the domestic unit opened stronger at 82. 81 against the dollar and touched 82.80, registering a gain of 5 paise over its previous close.
The Indian rupee began the week on a positive note, adjusting Friday's weakness in the dollar index and lower crude oil prices, said Dilip Parmar, Research Analyst, HDFC Securities.
At the interbank foreign exchange, the domestic unit opened at 82.32, registering a decline of 3 paise over its last close.
On Tuesday, the rupee had settled at 82.04 against the dollar.