The rupee recovered from early losses and closed 17 paise higher at 89.88 (provisional) against the US dollar on Tuesday, as the greenback and crude oil prices softened from recent highs.
According to forex traders, weakness in the US dollar overseas, driven by expectations of a Federal Reserve rate cut in December, helped support the domestic currency at lower levels.
However, gains were capped by a weak trend in domestic equities and continued foreign fund outflows, which weighed on overall sentiment.