Mumbai: The Indian rupee closed on a steady note against the US dollar on Tuesday as the domestic forex market turned cautious ahead of the RBI monetary policy outcome.
Besides, participants also took note of the developments on the global trade canvas, where US President Donald Trump announced imposition of tariffs on imports from Brazil and Argentina as well as indicated that a deal with China might not be happening till next year's US presidential polls.
At the interbank foreign exchange market, the rupee opened at 71.66 against the US dollar. During the day, the domestic unit fluctuated between a high of 71.52 and a low of 71.79.
The domestic unit finally settled at 71.66, unchanged from its previous closing price.
"On the domestic front, focus will be on RBI policy meeting and that would be important to trigger a move for the currency. We expect the USDINR(Spot) to quote in the range 71.70 and 72.20," Motilal Oswal Financial Services Private Ltd Forex & Bullion Analyst Gaurang Somaiyaa said.
Bankers and experts believe the Reserve Bank may cut interest rates for the sixth straight time on December 5 to support growth that has continued to slip.
The RBI has cut interest rates on every single occasion the monetary policy committee (MPC) has met since Shaktikanta Das took over as the Governor in last December.
Sentiments remained muted after US reinstated tariffs on imports from Argentina and Brazil and threatened even harsher penalties on dozens of popular French products, analysts said.
Further, the US president saying he had no deadline for reaching a trade agreement with China and it might be better to wait until after the US presidential elections in November 2020 also spooked investors, they added.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,731.33 crore on Monday, exchange data showed.
Brent futures, the global oil benchmark, fell 0.10 per cent to USD 60.86 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.07 per cent to 97.79.
The 10-year government bond yield was at 6.47 per cent on Tuesday.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.7217 and for rupee/euro at 79.0249. The reference rate for rupee/British pound was fixed at 92.6496 and for rupee/100 Japanese yen at 65.41.
On the equities front, the 30-share BSE Sensex settled at 40,675.45, down 0.31 per cent or 126.72 points.
The broader NSE Nifty settled at 11,994.20, showing a dip of 0.45 per cent or 54 points.