The rupee witnessed a range-bound trade and appreciated 1 paisa to 84.04 (provisional) against the US dollar on Tuesday, as weak crude oil prices and suspected intervention by the Reserve Bank supported the local currency at lower levels.

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Forex traders said the rupee was weighed down by significant foreign fund outflows, a negative trend in domestic equities and the overall strength of the American currency in the overseas market.

At the interbank foreign exchange, the rupee opened at 84.06 against the greenback and traded in a tight range of 84.03 and 84.07. The unit settled for the day at 84.04 (provisional), registering a rise of just 1 paisa over its previous close.

On Monday, the rupee recovered from its all-time low levels and appreciated 5 paise to close at 84.05 against the US dollar.

"The Indian rupee is near all-time lows on strong dollar and weak Asian currencies. Weak tone in the domestic equities and surge in inflation also weighed on the rupee," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

On the domestic macroeconomic front, soaring vegetable prices pushed the retail inflation rate to a nine-month high of 5.49 per cent in September, according to government data released on Monday.

The consumer price index (CPI) - based retail inflation was 3.65 per cent in August and 5.02 per cent in September 2023. The previous high inflation rate was witnessed in December 2023 at 5.69 per cent.

"We expect the rupee to trade with a negative bias on FII outflows and risk aversion in global markets amid geopolitical uncertainty in the Middle East. Overall strength in the US dollar may further pressurise the rupee," Choudhary said.

However, weak crude oil prices may support the rupee at lower levels. Any intervention by the RBI may also support the local currency. Traders may take cues from Empire State Manufacturing Index data from the US, Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.18 per cent lower at 103.11.

Brent crude, the global oil benchmark, declined 5.10 per cent to USD 73.51 per barrel.

On the domestic equity market front, Sensex advanced 152.93 points, or 0.19 per cent, to close at 81,820.12 points. The Nifty rose 70.60 points, or 0.28 per cent, to settle at 25,057.35 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 3,731.59 crore, according to exchange data.