The Indian currency showed much resilience to a sudden crash in local equity markets and managed to stand on a strong foot against the dollar in afternoon trade, in line with most Asian peers.

Overall sentiments improved globally helped by easing fears of a potential global trade war on Trump's tariffs after top Republicans criticised the plan.

Expectations of robust capital inflows into the country due to political stability, especially in the wake of BJP's strong showing in the country's North-East region ahead of the national election in 2019, predominantly kept forex sentiment high.

Furthermore, hopes that the government may raise debt investment limits for overseas investors to attract more funds also added some positive impact on the rupee front.

The rupee got off to a strong start at 64.97 compared to Monday's close of 65.12 at the inter-bank foreign exchange market (forex) here on sustained dollar selling and tracking early bullish local equities.

It gained further ground to hit a high of 64.92 in mid-morning deals but soon succumbed to volatility and confined to a tight trading range with local stocks taking a severe blow.

The local unit finally settled the session at 64.96, showing a smart gain of 16 paise, or 0.25 per cent.

The RBI, meanwhile fixed the reference rate for the dollar at 64.9941 and for the euro at 80.2092.

On the international energy front, global crude prices extended overnight gains, underpinned by robust demand forecasts and prospects for informal contacts sought by the OPEC with US shale oil producers at a key industry meeting in Houston this week.

Brent crude futures were trading at USD 65.68 a barrel in early Asian trading.

Meanwhile, domestic bourses suffered a nasty blow despite a strong start as implied volatility returned in a big way with both the key indices tumbling over 1 per cent on reports that ICICI Bank chief Chanda Kochhar and Axis Bank's Shikha Sharma have been summoned by the Serious Fraud Investigation Office (SFIO) in the Rs 12,000-crore PNB scam.

Asian stocks, however, made broad gains as fears over the possibility of a global trade war appeared to have eased somewhat.

Stamping its fifth straight fall, the flagship BSE tanked 430 points to end at 33,317.20, while NSE Nifty plunged 110 points to 10,249.25.

Globally, the US dollar was little changed against other major currencies, hovering close to a one-week trough as traders were still digested last week's news of possible US tariffs on steel and aluminium imports.

The dollar had tumbled to 16-month lows against the yen last week after President Donald Trump announced his plans for steel and aluminium tariffs.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 89.62 in early trade.

However, in cross-currency trades, the rupee dropped further against the pound sterling to finish at 90.19 per pound from 89.92 and also drifted further against the euro to close at 80.45 from 80.12 earlier.

But, the home unit recovered against the Japanese yen to end at 61.08 per yens from 61.70 yesterday.

Elsewhere, the euro traded little changed against the US dollar despite a worrying outcome in Italy's general election and trade war jitters.

The British pound extended the gains for the third consecutive day tracking weakness in the US dollar alongside a better-than-expected services PMI amid cautiousness ahead of the ECB monetary policy decision due this Thursday.

In forward market today, premium for dollar declined owing to fresh receiving from exporters.

The benchmark six-month forward premium payable in August moved down to 123.50-125.50 paise from 125-127 paise and the fag-forward February 2019 contract edged down to 239.50-241.50 paise against 242-244 paise previously.