Mumbai: The rupee on Tuesday depreciated by 17 paise to close at 68.71 against the US dollar due to rising crude oil prices and foreign fund outflows.
A strengthening US dollar against major currencies overseas also weighed on the rupee sentiment, forex traders said.
However, sustained buying in the domestic equity market restricted the rupee's fall, they added.
At the interbank foreign exchange (forex) market, the domestic currency opened lower at 68.59 per dollar, and further lost ground to touch the day's low of 69.76. The rupee finally settled at 68.71, down 17 paise over its previous close.
The rupee had settled at 68.54 against the US dollar on Monday.
The dollar index, which gauges the greenback's strength against a basket of six major currencies, moved up by 0.31 per cent to 97.23.
Brent crude futures, the global oil benchmark, rose 0.32 per cent to USD 66.69 per barrel.
India's exports declined for the first time in nine months in June hit by trade war between the US and China. Trade deficit slipped to USD 15.28 billion in June from USD 16.6 billion in the year-ago month.
Bond yields slid for a fifth straight day to 6.34 per cent, a two-and-a-half-year low mark on the hopes of further rate cuts post three consecutive rate cuts announced by the RBI so far in 2019, he said, adding that yields have come off by almost a percentage point since beginning of the fiscal year.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 216.44 crore on Monday, provisional exchange data showed.
The BSE Sensex closed at 39,131.04 points, showing a rise of 234.33 points or 0.60 per cent. The broader NSE Nifty ended 72.70 points or 0.63 per cent up at 11,661.05.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 68.5836 and for rupee/euro at 77.3074. The reference rate for rupee/British pound was fixed at 86.1991 and for rupee/100 Japanese yen at 63.49.