The rupee recovered from its all-time low level to settle 1 paisa higher at 84.10 (provisional) against the US dollar on Tuesday, supported by a recovery in the domestic markets and suspected intervention by the Reserve Bank of India.

Forex traders said investors were cautious ahead of the US presidential election. Markets are bracing for potential volatility over the coming days, especially with the Federal Reserve's monetary policy announcement also scheduled this week.

At the interbank foreign exchange, the rupee opened at 84.13 against the US dollar. During the session, the local currency oscillated between a high of 84.10 and a low of 84.13. It finally settled at 84.10 (provisional), 1 paisa higher from its previous close.

On Monday, the rupee fell 4 paise to close at a record low level of 84.11 against the US dollar.

"Indian rupee touched fresh record lows amid uncertainty over US elections and FII outflows. Elevated crude oil prices also weighed on the rupee. However, weak US Dollar and positive domestic markets prevented a sharp fall in the rupee," said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

Choudhary further said the rupee is likely to trade with a negative bias on FII outflows and overall strength in the US Dollar. Elevated crude oil prices may also mount pressure on the rupee. However, a recovery in the domestic markets and any intervention by the RBI supported the rupee at lower levels.

"We could see some volatility ahead of the US Presidential election results. Traders may take cues from trade balance and ISM services PMI from the US and FOMC meeting outcome later this week. USD/INR spot price is expected to trade in a range of 83.95 to 84.30," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.13 per cent lower at 103.73.

Brent crude, the global oil benchmark, rose 0.63 per cent to USD 75.55 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex surged 694.39 points, or 0.88 per cent, to close at 79,476.63, while Nifty advanced 217.95 points, or 0.91 per cent, to settle at 24,213.30.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Monday, as they offloaded shares worth Rs 4,329.79 crore, according to exchange data.

Meanwhile, India's manufacturing sector growth recovered from September's eight-month low to 57.5 in October fuelled by faster increases in total new orders and international sales, a monthly survey said on Monday.

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