Mumbai: The rupee pared initial gains to settle 1paisa 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.

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. “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.