The Frenchman was barred from competing at the US Open after testing positive and required to quarantine.
Paire subsequently tested negative in Rome last week, only to test positive again in Hamburg, although his most recent test was negative again.
The tournament doctor told reporters that, under local rules, individuals are not considered infectious so long after initially testing positive and therefore Paire was allowed to compete.
Not the ending we wanted to see 😔
Paire is forced to retire through injury, meaning @CasperRuud98 progresses at the #HamburgOpen.
Hope to see you back stronger, @benoitpaire 💪 pic.twitter.com/sYjipPgGUZ— Tennis TV (@TennisTV) September 23, 2020
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Paire told reporters: “I was positive here in Hamburg since I arrived. The only negative test I got yesterday. Before that two in a row I was positive. But the rule seems different here. So thank you to the tournament and the doctor here in Hamburg that I can play.
“Every night I go to sleep and they tell me maybe you are positive, maybe you are negative, maybe you can play, maybe you can’t. The only thing I want is to finish the season and to go home.”
The rules are different for the French Open, where any positive test means immediate elimination from the event.
A number of players who had been due to compete in qualifying but tested positive, or who had been in close contact with a coach who tested positive, have already been barred from playing at Roland Garros.
Paire cited tiredness after retiring during his clash with Casper Ruud while trailing 6-4 2-0, writing on Instagram: “When is it going to end?”
Second seed Stefanos Tsitsipas claimed his first ATP Tour win of the season on clay, beating Dan Evans 6-3 6-1 inside an hour, while Andrey Rublev and Cristian Garin both reached the quarter-finals.
Fifth seed Rublev saw off Tommy Paul 6-1 3-6 6-2 while Garin was a 6-2 7-6 (3) winner against Yannick Hanfmann.