The rupee depreciated by 10 paise to settle at 82.89 (provisional) against the U.S. dollar on Wednesday, as intense selling pressure in domestic equities and a strong greenback overseas dented the sentiment.
However, a sharp decline in crude oil prices in the international market restricted the rupee's fall, forex traders said.
At the interbank foreign exchange market, the rupee opened flat at 82.79, and it moved in a tight range of 82.89 to 82.79 during the session.
It finally closed at 82.89 against the U.S. dollar, registering a fall of 10 paise over its previous close of 82.79.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12% higher at 104.23 ahead of the release of the Federal Open Market Committee meeting minutes later in the day.
Bond yields in the U.S. have shot higher this month on anticipation of a firmer action by the Federal Reserve in its efforts to stamp out inflation.
Jateen Trivedi, VP Research Analyst at LKP Securities said, “Rupee traded weak below 82.85 amid increasing bond prices in the U.S. which have spiked above November 2022 rates. Keeping the hawkish view on rate hikes the participants keep increasing positions in safer dollars against risky assets.”
"Rupee weakness can be seen further below if RBI avoids intervention near 83.00." The Reserve Bank will also release the minutes of the MPC meeting held this month.
Global oil benchmark Brent crude futures declined 1.48% to $81.82 per barrel.
The 30-share BSE Sensex crashed 927.74 points or 1.53% to close at 59,744.98, while the broader NSE Nifty declined 272.40 points or 1.53% to 17,554.30.
Foreign Institutional Investors (FIIs) emerged as net buyers in the capital markets on Tuesday as they bought shares worth ₹525.80 crore, according to exchange data.