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The rupee depreciated by 13 paise to 73.15 against the US dollar in opening trade on Tuesday tracking the muted opening in domestic equities.
At the interbank forex market, the domestic unit was trading in a narrow range. It opened at 73.02 against the US dollar and fell to 73.15 against the greenback, registering a fall of 13 paise over its previous close.
On Monday, the rupee appreciated by 9 paise to close at a four-month high of 73.02 against the US dollar.
"Uncertainty surrounding the Georgia run-offs and rising Covid-19 infections could push investors towards the safe haven appeal of the US dollar and cap gains for the domestic unit," Reliance Securities said in a research note.
Most Asian currencies were flat against the greenback this Tuesday morning, it added.
The UK has issued stay-at-home orders for citizens as it goes into a lockdown which is expected to last until mid-February. The Sterling fell about 150 pips overnight from close to 1.37, said Abhishek Goenka, Founder and CEO, IFA Global.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.12 per cent to 89.76.
Traders said market participants remained cautious ahead of the outcome over the run-off elections in Georgia that will determine control of the US Senate.
In addition, traders will be eyeing the minutes of the December Federal Reserve meeting, the US ISM manufacturing and non-manufacturing data and the US monthly jobs report.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 174.91 points lower at 48,001.89, and the broader NSE Nifty was down 61.30 points at 14,071.60.
Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs 1,843.22 crore on a net basis on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.18 per cent to $51.00 per barrel.
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