The rupee came under pressure as the pace of foreign buying in domestic shares slowed, even as indices edged higher to record highs. Meanwhile, in debt markets, foreign investors have been net sellers over the previous two weeks.
Traders said the near-term outlook for the rupee will depend on the movement of these foreign fund flows, as well as global developments, especially lingering tensions in Ukraine and continued concerns about Chinas economy.
The flows into equity and debt markets have slowed in April. Their momentum going ahead will be crucial as also the development in Ukraine, said Hari Chandramgethen, head of foreign exchange trading, South Indian Bank.
The rupee is likely to trade in a 60.40 to 61.25 range in the rest of the week. The partially convertible rupee closed at 60.77 per dollar compared with 60.60 on Monday. The unit fell as low as 60.89, its lowest level since March 21, continuing its retreat from an eight-month high of 59.59 in early April.
Meanwhile, emerging Asian currencies eased on Tuesday as China's yuan fell to its weakest in 14 months, with the Indonesian rupiah at a near seven-week low.