The rupee pared its initial gains and settled lower by 3 paise at 83.36 (provisional) against the US dollar on Monday amid a recovery in the greenback in overseas markets.

Forex traders said the rupee gained earlier in the day as domestic equity indices surged to record highs after the ruling BJP scored a spectacular win in three Hindi heartland states. Moreover, sustained foreign fund inflows also supported the local currency.

At the interbank foreign exchange market, the local unit opened at 83.28 and touched a low of 83.37 against the greenback. It finally settled at 83.36 (provisional) against the dollar, down by 3 paise from its previous close.

On Friday, the rupee settled at 83.33 against the American currency.

"The Indian rupee eked out opening gains and headed lower following the weaker Chinese currency. The market ignored the positive political news and lower crude oil prices as traders worried about the central bank’s two-way interventions," said Dilip Parmar, Research Analyst, HDFC Securities.

Looking at the price actions, the rupee is facing resilience in crossing the 83.10 to 83.50 range, he said.

"However, the seasonality patterns and expectations of year-end dollar inflows may support the rupee in limiting losses in case of short covering bounce in the greenback," Parmar said.

According to traders markets now await for RBI Monetary policy on December 8, and non-farm payroll data from the US on the same day in the evening for further cues.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 103.32.

Brent crude futures, the global oil benchmark, fell 0.51 per cent to USD 78.48 per barrel.

On the domestic equity market front, Sensex surged 1,383.93 points, or 2.25 per cent, to settle at 68,865.12 points. The Nifty advanced 418.90 points, or 2.07 per cent, to 20,686.80 points.

Foreign institutional investors were net buyers in the capital market on Friday as they purchased shares worth Rs 1,589.61 crore, according to exchange data.

Meanwhile, India's foreign exchange reserves increased USD 2.538 billion to USD 597.935 billion for the week ended November 24, the Reserve Bank said on Friday.

In the previous reporting week, the overall reserves had jumped USD 5.077 billion to USD 595.397 billion.

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