The rupee depreciated by 21 paise to close at 85.60 (provisional) against the US dollar on Tuesday, as a stronger greenback and persistent foreign fund outflows weighed on market sentiment.Forex traders said the domestic unit came under pressure due to negative trends in local equity markets and geopolitical uncertainties. Investors also remained cautious ahead of the Reserve Bank of India’s (RBI) upcoming monetary policy decision, PTI reported.The RBI’s Monetary Policy Committee (MPC) begins its three-day policy deliberation on Wednesday, with the outcome scheduled for announcement on June 6.At the interbank foreign exchange market, the rupee opened at 85.55 and traded between a high of 85.44 and a low of 85.60 against the dollar. It eventually settled at the day’s lowest point, recording a 21 paise loss from its previous close.On Monday, the rupee had gained 16 paise to finish at 85.39 against the US dollar.Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, attributed the rupee’s decline to subdued domestic equities and foreign institutional investor (FII) outflows.“Trade tensions between US and China and renewed geopolitical tensions between Ukraine and Russia may also weigh on the domestic unit. Traders may take cues from job openings and factory orders data from the US,” Choudhary said, adding, “USD-INR spot price is expected to trade in a range of 85.20 to 85.90.”The dollar index, which measures the greenback’s strength against a basket of six major currencies, was trading 0.25 per cent higher at 98.95.While the index initially weakened following a sharper-than-expected drop in the US ISM manufacturing PMI, it quickly rebounded after China’s manufacturing PMI revealed slower-than-anticipated growth.Meanwhile, Brent crude futures, the global oil benchmark, dipped 0.12 per cent to USD 64.55 per barrel.On the equities front, the 30-share BSE Sensex plunged 636.24 points, or 0.78 per cent, to settle at 80,737.51, while the NSE Nifty50 dropped 174.10 points, or 0.70 per cent, to close at 24,542.50.FIIs offloaded shares worth Rs 2,589.47 crore on a net basis on Monday, as per exchange data.A monthly survey released on Monday revealed a slowdown in India’s manufacturing sector, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) slipping to a three-month low. The PMI declined from 58.2 in April to 57.6 in May, indicating the weakest improvement in operating conditions since February, as inflationary pressures, softer demand, and heightened geopolitical concerns impacted growth