With today's fall the rupee has hit the lowest level since February 4, when it closed at 71.80 against the dollar.
"Indian rupee declined for a second day as importers and foreign banks rush for the dollar amid recovery in crude oil prices. Market is also expecting fund outflows of around $102 million on the back of Shell selling stake in Mahanagar gas," PTI quoted VK Sharma, head PCG & capital markets strategy, HDFC Securities as saying.
The dollar index hovered near a three-week high as expectations of fresh stimulus drove an improvement in appetite for riskier assets and lifted US government bond yields, Mr Sharma said, adding that the next support for the rupee is seen at 72.50 odd levels.
The dollar index -- which gauges the greenback's strength against a basket of six currencies -- rose 0.06 per cent to 98.40.
Brent crude futures, the global oil benchmark, rose 0.07 per cent to trade at $59.78 per barrel.
The benchmark indices BSE Sensex and NSE Nifty50 snapped their three-day winning run dragged by banking shares.
The Sensex ended 74 points or 0.2 per cent lower at 37,328 and the NSE Nifty 50 declined 37 points or 0.3 per cent to close at 11,017.
Foreign institutional investors (FIIs) bought equities worth Rs 373.23 crore on Tuesday, NSE's provisional data showed.
The yield on the 10-year Indian government bond ended flat at 6.59 per cent on Tuesday.
On Monday, the rupee had settled at 71.43 against the American currency.
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