The rupee depreciated by 31 paise to 74.86 (provisional) against the U.S. currency on Tuesday as riskier assets took a hit amid deepening geopolitical tensions.
Forex traders said sustained foreign fund outflows, a lacklustre trend in domestic equities and elevated crude oil prices weighed on investor sentiment.
At the interbank foreign exchange, the rupee opened at 74.71 against the American dollar but later dropped to a low of 74.99 against the greenback.
The local unit was quoted at 74.86 at close, down 31 paise from the previous close.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04% lower at 96.03.
"The rupee has glided lower by around 0.50% amid mounting tensions between Russia and Ukraine, which has hurt the risk sentiments in the markets and led to significant outflows," said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking Ltd.
Besides, crude prices have soared to seven-year highs due to lingering supply worries, which is dragging down the Indian rupee, Ms. Sachdeva added.
Global oil benchmark Brent crude futures jumped 3.56% to $98.79 per barrel.
"As of now, the dollar looks to remain well bid, owing to its safe-haven appeal in a backdrop of heightened geopolitical risks. This shall keep the Indian rupee under pressure in the near-term. We envisage near-term support at the 75 mark for the domestic unit, a breach of which shall lead to further depreciation for the rupee-dollar exchange rate," Ms. Sachdeva said.
On the domestic equity market front, the 30-share Sensex ended 382.91 points or 0.66% lower at 57,300.68, while the broader NSE Nifty settled down 114.45 points or 0.67% at 17,092.20.
Foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth ₹2,261.90 crore, as per stock exchange data.
