The rupee depreciated 13 paise to 81.82 against the U.S. dollar in early trade on January 18, as a strengthening American currency and firm crude oil prices weighed on investor sentiments.
At the interbank foreign exchange, the domestic unit opened weak at 81.80 against the dollar, then fell to 81.82, registering a decline of 13 paise over its last close.
In the previous session on Tuesday, the rupee settled at 81.69 against the U.S. dollar.
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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.49% to 102.88.
Brent crude futures, the global oil benchmark, advanced 0.65% to $86.48 per barrel.
Traders said market participants remain cautious ahead of the Bank of Japan's policy statement.
Bank of Japan has been by far the most dovish central bank and has used all kinds of unconventional tools to keep its policy ultra accommodative. Any departure from this policy would therefore be a huge shift, IFA Global Research Academy said in a research note.
"We expect the USD/INR spot to trade in a 81.55-81.85 range with sideways price action," it added.
In the domestic equity market, the 30-share BSE Sensex was trading 157.99 points or 0.26% higher at 60,813.71. The broader NSE Nifty advanced 44.60 points or 0.25% to 18,097.90.
Foreign Institutional Investors (FIIs) turned net buyers in the capital markets on Tuesday as they purchased shares worth ₹211.06 crore, according to exchange data.
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