The rupee slumped by 87 paise to close at 73.38 (provisional) against the U.S. currency on Tuesday as rising crude oil prices and a strong American currency weighed on investor sentiment.
At the interbank forex market, the local unit opened at 72.85 against the greenback and traded in the range of 72.77-73.47 during the day.
The rupee finally ended at 73.38 against the American currency, registering a fall of 87 paise over its previous closing.
On Friday, the rupee had settled at 72.51 against the American currency.
The forex market was closed on Monday on account of Holi.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.20% to 93.12.
"Indian Rupee depreciated amid strong dollar and rise in crude oil prices. Dollar gained strength amid surge in U.S. treasury yields. Yields jumped on expectation that rollout of COVID-19 vaccines and government stimulus efforts will accelerate economic growth and inflation," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
Additionally, the rupee slipped on concern over rising COVID-19 cases in India. However, a sharp fall was prevented on rise in risk appetite in the domestic market. Rupee may trade in the range of 72.70 to 73.60 in next couple of sessions, Mukadam noted.
Brent crude futures, the global oil benchmark, was trading 0.69% down at $64.53 per barrel.
On the domestic equity market front, the BSE Sensex ended 1,128.08 points or 2.30% higher at 50,136.58, while the broader NSE Nifty advanced by 337.80 points or 2.33% to 14,845.10.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth ₹50.13 crore on Friday, according to exchange data.