The rupee gained a touch early on Tuesday as the dollar broadly retreated from a two-decade high even as central banks' tightening monetary policy path and Europe's energy crises continued to stress sentiment.
Bloomberg showed the partially convertible-rupee was last changing hands at 79.8313 per dollar, compared to Monday's close of 79.8488, with early trades in the range of 79.7912 to 79.8387 against the greenback.
But PTI reported that at the interbank forex market the rupee fell 12 paise to 79.90 against the US dollar in early trade.
Reserve Bank of Governor on Monday in his keynote address at the FIMMDA (Fixed Income Money Market And Derivatives Association Of India) annual event said, the rupee has held its own in extremely volatile global financial markets, which has seen sharp depreciation of most major currencies against the dollar.
After a massive rally, the dollar took a break on Tuesday, dropping only a little off historic highs against the euro, yen, and sterling even as US interest rates are set to rise sharply.
The euro touched a two-decade low of $0.9876 on Monday as the reality of a winter without Russian gas set in, although it was up 0.4 per cent to $0.9963 in early Asian trade.
"Existential choices now need to be made, because there may not be enough energy to go round," Michael Every, global strategist at Rabobank told Reuters. "The choices are obviously unappetising."
After reaching a high of 110.27 on Monday, the dollar index decreased 0.06 per cent to 109.53. The yen last traded at 140.51 per dollar, not far from a 24-year low of 140.80 recorded last week.
The decline in the yen is due to the acceleration of US rate hikes, which have increased the gap with anchored Japanese interest rates, or widely called the interest-rate differentials.
Following China's announcement of a reduction in the amount of foreign exchange deposits banks must keep aside as reserves, the offshore yuan gained but the move had only a limited effect on the exchange rate.
For the first time in two years, China set the yuan reference rate lower than 6.9 to the dollar, paving the way for additional currency devaluation.