Besides, strong demand for the American currency from importers also weakened the rupee performance. The US dollar's gains against major rival currencies yen, pound and euro too impacted the domestic currency market sentiments.
At the Interbank Foreign Exchange (forex) Tuesday, the rupee opened on a sluggish note at 69.83. It weakened further to hit a low of 70.23 (intra-day), before finally closing at 70.21, showing a loss of 53 paise.
This was the first loss for the Indian currency unit in three sessions. It had risen by 52 paise in the previous two trading days.
On Monday, the rupee had gained 4 paise to end at 69.68 against the US dollar.
The brent crude, a global benchmark, was trading at 58.07 per barrel, up 1.29 per cent.
Investors seemed to have turned cautious keeping in view persistent rise in crude oil prices, which threaten lifting the country's oil import bill and expanding current account deficit, according to analysts.
Meanwhile, domestic bourses continued their stellar show for the third straight session, with the benchmark Sensex rising by another 130 points on account of fresh inflows by foreign funds and positive global cues.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.0221 and for rupee/euro at 80.1576. The reference rate for rupee/British pound was fixed at 89.4238 and for rupee/100 Japanese yen at 64.37.
Foreign funds Tuesday pulled out Rs 553.78 crore from the capital markets on a net basis, while domestic institutional investors purchased shares worth Rs 698.17 crore Tuesday, provisional data showed.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)