The rupee pared its early gains and settled lower by 4 paise at 71.31 against the US currency on Thursday amid heavy selling in domestic equities and steady rise in crude oil prices.
Month-end dollar demand and weakness in domestic equities weighed on the domestic currency, forex traders said.
At the interbank foreign exchange market, the rupee had opened higher at 71.26 against the US dollar. During the day, the domestic unit fluctuated between a high of 71.22 and a low of 71.35.
The rupee finally settled at 71.31 against the US dollar, lower by 4 paise over its previous close of 71.27 on Tuesday.
Forex market was closed on Wednesday on account of the Christmas holiday.
"Volatility in the next couple of sessions could remain low as major global markets would remain shut on account of Christmas holidays. No important economic data releases could keep the momentum low for major crosses as well," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.
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