The rupee consolidated in a narrow range and settled 7 paise higher at 79.74 (provisional) against the US dollar on Tuesday, as investors await the US Fed's policy statement for further cues.

At the interbank forex market, the local unit opened at 79.70 against the greenback. It witnessed an intra-day high of 79.58 and a low of 79.77 during the session.

It finally ended at 79.74, up 7 paise from its previous close of 79.81.

The dollar index, which measures the greenback's strength against a basket of six currencies, rose 0.12 per cent to 109.87.

Brent crude futures, the global oil benchmark, advanced 0.14 per cent to $92.13 per barrel.

"Rupee continued to consolidate in a narrow range despite gains in domestic equities. Volatility remained low ahead of the important FOMC policy statement that will be released tomorrow," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

Somaiya further said the expectation is that the US central bank could raise rates by another 75 basis points. The Fed governor could maintain a hawkish stance and that could keep the dollar supported.

"We expect the USD-INR (Spot) to trade sideways and quote in the range of 79.40 and 80.05," Somaiya said.

Foreign Institutional Investors (FIIs) turned net buyers in the capital markets, as they purchased shares worth ₹312.31 crore on Monday, according to exchange data.

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