Mumbai, July 8: The rupee pared initial gains to settle 1 paisa lower at 83.50 against the US dollar on Monday, as muted domestic equities weighed on investor sentiments. At the interbank foreign exchange market, the local unit opened at 83.45 and hit the intraday high of 83.44 and a low of 83.50 against the American currency during the session. It finally settled at 83.50 against the dollar, registering a loss of one paisa over the previous close. On Friday, the rupee settled at 83.49 against the US dollar.

Forex traders said the rupee gained on a weak dollar and decline in crude oil prices. However, weak domestic markets put pressure on the domestic unit.

"The US Dollar declined on disappointing non-farm payrolls report on Friday, which raised expectations that US Federal Reserve may cut interest rates in its September Federal Open Market Committee (FOMC) meeting," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas. INR vs USD: Rupee Falls 5 Paise to 83.54 Against US Dollar in Early Trade.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 104.90, higher by 0.03 per cent. Brent crude futures, the global oil benchmark, declined 0.88 per cent to USD 85.78 per barrel. "We expect the rupee to trade with a slight positive bias on the weak tone in the US Dollar and FII inflows. However, a correction in the domestic markets and political uncertainty in France as the election results indicate a hung parliament may cap the sharp upside," Choudhary added. IT Ministry’s Task Force Suggests Massive INR 44,000 Crore Push for Indian Electronics Firms.

In the domestic equity market, the 30-share BSE Sensex ended the day 36.22 points, or 0.05 per cent, lower at 79,960.38 points. The broader NSE Nifty settled 3.30 points, or 0.01 per cent, up at 24,320.55 points. Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth Rs 1,241.33 crore, according to exchange data. India's forex reserves dropped USD 1.713 billion to USD 651.997 billion for the week ended June 28, the Reserve Bank of India (RBI) said on Friday.