Mumbai: Catching its breath after a spectacular three-day rally, the rupee surrendered some gains against the US currency and settled lower by 3 paise at 64.08 on fresh bouts of dollar demand.
The domestic currency had ended at a fresh 21-month high on Monday.
Robust capital flows into equities and debt along with subdued dollar overseas trend largely cushioned the fall, a currency trader said.
Overall forex market sentiment turned little volatile after country's trade deficit widen to USD 13.24 billion during the month under review from USD 4.84 billion a year ago following a steep jump in gold imports.
India's exports grew by 19.77 percent to USD 24.63 billion in April, while imports jumped 49.07 percent to USD 37.88 billion last month from USD 25.4 billion in April 2016, according to the data released by the commerce ministry.
Meanwhile, the ongoing massive rally on domestic bourses pushed equity benchmarks to another life-time highs, driven by feel-good factors as well as sound macro-economic fundamentals.
The flagship Sensex soared to a new life-time high of 30,582, while the broader Nifty ended above the 9,500-mark.
The rupee opened almost flat at 64.06 from overnight closing value of 64.05 at the Interbank Foreign Exchange market.
It hovered in a tight range of 64.02 and 64.16 most part of the day before ending at 64.08, showing a small loss of 3 paise, or 0.05 percent.
The local unit had appreciated by a healthy 58 paise in the last three sessions.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.0758 and for the euro at 70.5539.
In worldwide trade, the greenback fell back sharply as political turmoil and doubts over interest rate rise pressured the dollar, while traders expected robust euro zone growth data.
The dollar index, which tracks the US currency against a basket of six major rivals, was sharply down 0.55 percent at 98.25.
In cross-currency trades, the rupee recovered against the pound sterling to finish at 82.60 from 82.81 per pound and also bounced back against the euro to conclude at 70.89 as compared to 70.26 earlier.
However, it strengthened further against the Japanese Yen to end at 56.36 per 100 yens from 56.45 yesterday.
In forward market today, premium for dollar displayed a steady to firm trend.
The benchmark six-month premium payable in October was quoted steady at 145-147 paise, while the far forward April 2018 contract moved higher to 301-303 paise from 299-301 paise previously.
In the international commodity front, crude prices rose on Tuesday, extending gains after a joint announcement by top producers Saudi Arabia and Russia to push for an extension of supply cuts until the end of March 2018 gained traction.
The brent crude futures were at USD 52.08 per barrel in early Asian trade, up 26 cents, or 0.5 percent, from their last close.