The rupee traded in a narrow range on Tuesday and depreciated 2 paise to close at 83.97 (provisional) against the American currency, weighed down by the strengthening of the American currency in the overseas market.

Forex traders said the US dollar recovered amid mixed non-farm payrolls data. The slight recovery in crude oil prices also weighed on the rupee. However, a surge in the domestic markets cushioned the downside.

At the interbank foreign exchange market, the local unit opened at 83.95 against the American currency and finally settled at 83.97 (provisional) against the US dollar, down 2 paise from its previous close.

On Monday, the rupee traded in a narrow range and closed flat at 83.95 against the American currency.

"We expect the rupee to trade with a slight negative bias on the strong US dollar and concerns over global economic growth. However, positive domestic markets and any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels," Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said.

Choudhary further noted that "investors may remain cautious ahead of the US CPI and ECB monetary policy this week. "USDINR spot price is expected to trade in a range of 83.70 to 84.20," he said.

On the domestic equity markets front, the Sensex climbed 361.75 points, or 0.44 per cent, to settle at 81,921.29 points, while the Nifty rose 104.70 points, or 0.42 per cent, to close at 25,041.10 points.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.03 per cent to 101.58.

Brent crude, the international benchmark, fell 1.16 per cent to 71.01 in futures trade.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Monday, as they purchased shares worth Rs 1,176.55 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.