The Indian rupee snapped a six-session winning run on Monday, amid thin trading volumes, as dollar bids from state-run lenders outweighed the recent positive momentum.
Indian foreign exchange markets will be closed on Tuesday for a local holiday.
The rupee hit a six-month high of 93.69 per dollar, extending last week's rally of more than 1% but closed slightly lower at 93.9275, from the previous close at 93.9050.
Some traders said state-run banks' dollar purchases could be on behalf of the central bank, whose recent measures have helped address the persistent supply-demand imbalance in the foreign exchange market.
A decline in crude oil prices alleviated pressure on the Indian currency, with foreign investors returning to equities.