The rupee depreciated 7 paise and settled at 73.35 (provisional) against the US dollar on Tuesday tracking muted domestic equities and strengthening American currency.
At the interbank forex market, the rupee opened on a weak note at 73.41, pared some losses and finally closed at 73.35 against the greenback, down 7 paise over its previous close of 73.28.
During the session, the domestic unit touched an intra-day high of 73.32 and a low of 73.41 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.18 percent to 93.23.
Forex traders said investors are cautious following muted domestic macro-economic data. Rising food prices pushed retail inflation to an eight-month high of 7.34 percent in September, above the RBI's comfort level, while industrial output continued to contract in August, official data showed on Monday.
The decline in the Index of Industrial Production (IIP) was 10.8 percent in July. The contraction in August stood at 8 percent, as per the latest data. On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 5.27 points higher at 40,599.07 and broader NSE Nifty rose 2.05 points to 11,933.00.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 615.17 crore on a net basis on Monday, according to provisional exchange data. Brent crude futures, the global oil benchmark, rose 0.74 percent to USD 42.03 per barrel.