Mumbai, Nov 4 (PTI) The rupee recovered from the record low level and settled with a gain of 7 paise at 88.70 against the US dollar on Tuesday, boosted by a correction in global crude oil prices.

Forex traders said a firm dollar, foreign fund outflows and subdued domestic equity markets prevented a sharp gain in the Indian currency.

At the interbank foreign exchange, the rupee opened at 88.55 and hit the intra-day high of 88.28 against the greenback. The unit finally closed at 88.70, up 7 paise from its previous closing level.

On Monday, the domestic unit, declining for the third consecutive session, ended 7 paise lower at 88.77 against the US dollar, near its all-time closing level.

The rupee had recorded its lowest-ever closing level of 88.81 against the dollar on October 14.

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said the rupee started the session on a strong note, "likely supported by intervention".

"Persistent FII outflows and cautious market sentiment kept the recovery short-lived. Going forward, the rupee movement is expected to remain volatile, with RBI interventions providing support around lower levels, while selling pressure could cap gains. The expected trading range for the rupee is between 88.25 and 88.90," Trivedi added.

The foreign exchange markets will be closed on Wednesday on account of the Prakash Gurpurab holiday.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.09 per cent to 99.80.

Brent crude, the global oil benchmark, fell 1.37 per cent to USD 64 per barrel in futures trading.

On the domestic equity markets front, the Sensex tanked 519.34 points or 0.62 per cent to settle at 83,459.15, while the Nifty declined 165.70 points or 0.64 per cent to end at 25,597.65.

Foreign institutional investors sold equities worth Rs 1,067.01 crore on Tuesday, according to exchange data.

A monthly survey released on Monday showed India's manufacturing sector activity strengthened in October, buoyed by Goods and Services Tax relief, productivity gains and tech investment, even as international sales increased at a weaker pace.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from 57.7 in September to 59.2 in October, indicating a quicker improvement in the sector's health. PTI HVA ANU BAL BAL

Currency volatility: Rupee saw a short-lived recovery as interventions may support lower levels, but selling pressure could cap gains. The rupee recovered seven paise to the reported level against the US dollar, aided by a correction in global crude oil prices, but a firm dollar, persistent foreign institutional investor outflows and weak domestic equity markets constrained gains. Market commentary expects continued volatility with central bank interventions providing support around lower levels while selling pressure could cap upside, and analysts identified an anticipated intraday trading range and macro indicators as near-term influences.