The rupee fell 12 paise to 83.56 versus the US dollar in early trade on Tuesday, pressured down by the strengthening of the US currency in offshore markets and rising crude oil prices. Forex dealers claimed oil importers and Foreign Portfolio Investors (FPIs) bought US dollars as US rates rose, dragging down the local currency.

In early trades on the interbank foreign currency market, the rupee began at 83.51 and fell further to trade at 83.56 versus the US dollar, a 12-paise drop from its previous closing level.On Monday, the rupee fell 10 paise to 83.44 versus the US dollar. According to Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP, the rupee saw dollar inflows and surged to 83.37 on Monday before falling to 83.44 as oil and FPIs bought dollars in anticipation of higher US rates.

According to Bhansali, the rupee is expected to reach 83.55 on Tuesday before falling to 83.45, with a tight range for the day of 83.40 to 83.55.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading at 105.91, up 0.02 percent, following a rise in US government rates as investors considered a second Trump presidency.

Brent crude futures, the global oil benchmark, rose 0.22% to $86.80 a barrel. In the domestic equities market, the major indexes, the Sensex and Nifty, reached lifetime highs in early trading. However, the indexes erased their initial gains, trading 64.46 points, or 0.08 percent, down at 79,411.73 points. The wider NSE Nifty declined 25.55 points (0.11 percent) to 24,116.40 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday, selling shares worth Rs 426.03 crore, according to exchange data.