The Indian rupee slipped its initial gains to close down by 12 paise at 73.42 against the USD on Tuesday amid concerns that rising COVID-19 cases.

Investors were also cautious ahead of the RBI policy statement to be released on Wednesday. Also, gains in crude prices and a stronger dollar overseas weighed on the rupee sentiment.

''Rupee continued to trade in a narrow range for the third successive session despite volatility in domestic equities. Market participants remain cautious ahead of the important RBI policy statement that will be released on Wednesday,'' Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said.

The expectation is that the central bank could keep rates unchanged but commentary will be keenly watched that could trigger volatility for the currency, Somaiyaa said. ''We expect the USDINR (Spot) to trade sideways with a positive bias and quote in the range of 73.20 and 73.80,'' he added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 percent to 92.71. Brent crude futures, the global oil benchmark, were trading 2.37 percent up at USD 63.62 per barrel.

In the stock market today, the BSE Sensex ended 42 points higher at 49,201 while the NSE Nifty 50 index rose 45 points to close at 14,683.

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