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Mumbai: The rupee pared initial gains to settle almost flat at 71.71 against the US dollar on Monday as rising crude oil prices kept investors edgy.

Rising crude oil prices and foreign fund outflows weighed on the domestic currency, forex dealers said.

Crude oil spurted 0.44 per cent to USD 61.81 per barrel in anticipation that new Saudi energy minister, Prince Abdulaziz bin Salman, would push for production cuts.

At the interbank foreign exchange market, the local unit witnessed heavy volatility. During the day, the domestic unit shuttled between a high of 71.50 and low of 71.73.

The rupee finally settled at 71.71, higher by just 1 paise over its previous close. The rupee has extended gains for the fourth day in a row. The rupee had settled at 71.72 against the US dollar on Friday.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 188.08 crore on Monday, according to provisional exchange data.

Forex traders said market investors were optimistic about cut in interest rates by the US Federal Reserve.

"Market participants have been pricing in some form of a monetary easing as yield curves have inverted in the last month in the US and a breather is very much needed on the cards," Rajesh Cheruvu, The Chief Investor, Validus Wealth.

Cheruvu further said that "there have been some comforting signs of the trade war simmering down and the Brexit and Hong Kong protests have eased somewhat though, remains to be seen whether optimism persists."

Going ahead, the European Central Bank (ECB) rate decision, the US CPI and retail sales would be closely watched metrics for forex traders this week.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.06 per cent to 98.33.

The 10-year government bond yield was at 6.58 per cent on Friday.

On the domestic market front, after opening on a negative note, the 30-share index rebounded 460 points from the day's low of 36,784.47 to settle 163.68 points, or 0.44 per cent, higher at 37,145.45. Similarly, the broader NSE Nifty rose 56.85 points, or 0.52 per cent, to close at 11,003.05.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.7323 and for rupee/euro at 79.2097. The reference rate for rupee/British pound was fixed at 88.5057 and for rupee/100 Japanese yen at 67.04.

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