The rupee pared all its initial gains to settle just 1 paisa higher at 83.14 (provisional) against the US dollar on Monday, as the downward movement in crude oil prices in international markets supported the local unit.

However, a strong American currency overseas and negative domestic equities dented overall sentiment, forex dealers said.

At the interbank foreign exchange market, the local unit opened strong at 83.09 and oscillated between the peak of 83.04 and the lowest level of 83.16 against the greenback during the session.

The domestic currency finally settled at 83.14 (provisional), up 1 paisa from its previous close.

On Friday, the domestic currency settled with a gain of 9 paise at 83.15 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.06 per cent higher at 102.18 on Monday.

Brent crude futures, the global oil benchmark, declined 1.14 per cent to USD 77.86 per barrel.

On the domestic equity market front, Sensex plunged 670.93 points, or 0.93 per cent, to settle at 71,355.22 points. The Nifty advanced 197.80 points, or 0.91 per cent, to 21,513.00 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they bought shares worth Rs 1,696.86 crore, according to exchange data.

On the domestic macroeconomic front, the services sector growth in India rose to a three-month high in December supported by favourable economic conditions and positive demand trends.

The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 56.9 in November to 59 in December, highlighting a sharp increase in output.

The country's forex reserves jumped by USD 2.759 billion to USD 623.2 billion in the week ended December 29, the Reserve Bank said on Friday.

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