The rupee surrendered all its initial gains to settle 2 paise lower at 83.05 (provisional) against the US dollar on Monday, in line with a lacklustre trend in domestic equity markets.

However, a weak greenback against major currencies overseas and sustained buying by foreign investors supported the local currency, forex traders said.

At the interbank foreign exchange market, the local unit opened strong at 82.97 against the greenback and traded in a range of 82.90-83.06. It finally settled at 83.05 (provisional), a decline of 2 paise over its previous close.

On Friday, the domestic currency settled at 83.03 against the dollar.

"The minor weakness observed in capital markets and profit booking after a rapid rally from 83.30 to 82.90 contributed to this downward movement.

"Despite this, the short-term trend for the rupee looks positive, with the dollar index showing broad weakness and a positive money flow into Indian capital markets. The anticipated rupee range is between 82.75 and 83.25," Jateen Trivedi, VP Research Analyst at LKP Securities, said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.10 per cent lower at 102.07.

Brent crude futures, the global oil benchmark, fell 0.57 per cent to USD 76.121 per barrel.

In the domestic equity market, the 30-share BSE Sensex settled 168.66 points or 0.24 per cent lower at 71,315.09. The broader NSE Nifty fell 38 points or 0.18 per cent at 21,418.65.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 9,239.42 crore, according to exchange data.

Except for the headline, this story has not been edited by The Telegraph Online staff and has been published from a syndicated feed.