Indian rupee, the domestic benchmark, slipped 10 paise to 73.94 against the US dollar on Tuesday's opening trade, tracking muted domestic equities.
At the interbank forex market, the domestic unit opened weak at 73.94 per dollar, falling 10 paise over its previous close.
On Monday, the rupee depreciated 23 paise and settled at 73.84 per US dollar.
Meanwhile, the dollar index fell 0.10 per cent to 92.95 against a basket of six currencies.The dollar index fell to a one-month low against a basket of major currencies, amid news of renewed government spending in US economy.
On the equity market front, BSE index Sensex traded 200 points higher at 40,356 and Nifty gained 70 points to 11,836.
Foreign portfolio investors (FPIs) sold shares worth Rs 119.42 crore, while domestic institutional investors (DIIs), were net sellers to the tune of Rs 979.16 crore in the Indian equity market on 26 October, provisional data showed.
Brent crude futures, the global oil benchmark, increased 0.57 per cent to USD 40.69 per barrel. Oil price slipped as rising corona virus cases across continents dimmed the possibility of demand recovery while rising supply also hurt sentiments.
"Market participants continue to re-adjust their positions ahead of the US presidential elections. Risky bets are being taken off the table. Overall mood is that of caution," said Abhishek Goenka, Founder and CEO, IFA Global.
Goenka further added that markets are unnerved by lack of progress on fiscal stimulus, rising corona cases in Europe and the US and the latest escalation in US-China tensions.
"China's plan to sanction Boeing Defense, Lockheed Martin over arms sales to China has also spooked investors. Turkish lira depreciating past the 8 mark against the US dollar has skewed sentiment against EM currencies," he said.