The rupee reversed losses from early in the session to end nearly flat against a resurgent dollar, defying a broader sell-off in risk assets as sentiment was dented by rare and widespread demonstrations against stringent Covid restrictions in China, rattling investors globally.
After opening at 81.7887 per dollar, Bloomberg showed that the rupee was last at 81.6687, compared to its previous close of 81.6862 on Friday.
PTI said the rupee rose 5 paise to close provisionally at 81.66 against the US dollar.
"The Indian rupee was in a range of 81.62 to 81.83 after opening weak at 81.80 as equities in India recovered even though most Asian and European equities were down. The RBI has not allowed the rupee to move below 81.90 or above 81.40 for the past eight days," said Anil Kumar, Bhansali Head of Treasury at Finrex Treasury Advisors.
"India's resilience is to be watched in the next few weeks," he added.
Indian equity benchmarks scaled new record highs on Monday, defying a broader global gloom.
The rise in domestic stocks was driven largely by robust capital inflows on expectations the US Federal Reserve will taper its pace of future rate hikes as early as next month, easing inflation reports and a plunge in crude oil prices.
That helped the domestic currency even as the dollar was boosted by haven demand as the yuan weakened and Chinese equities led stock-market declines in Asia.
World shares slid as growing unrest in China over Covid restrictions sent a shiver through global markets, and the dollar strengthened on the risk-off mood.
The domestic session saw the onshore yuan end about 0.5 per cent lower at 7.199 per dollar, the weakest close since November 10. In Asian trading, the offshore yuan hit a more than two-week low.
"We're really looking at the government response to what's happening...the government response is so unpredictable, and of course that just means derisking," Chris Weston, Head of Research at Pepperstone, told Reuters.