The US inflation figures for January sparked concerns that the Federal Reserve may maintain interest rates higher for longer, which caused the rupee to weaken 12 paise to 82.90 against the US dollar in early trade on Wednesday.
Investor morale was further dampened by a flat domestic equity market and high crude oil prices, according to forex traders.
The local unit opened weakly at 82.90 against the dollar on the interbank foreign exchange, falling 12 paise from its previous close.
In the previous session on Tuesday, the rupee settled at 82.78 against the dollar.
The dollar index, which measures the strength of the dollar against a basket of six different currencies, increased 0.14 percent to 103.38.
The international oil benchmark, Brent crude futures, saw a 0.70 percent fall to USD 84.98 per barrel.
The 30-share BSE Sensex was down 265.2 points, or 0.43 percent, to 60,767.06 on the domestic equity market. The NSE Nifty index as a whole dropped by 69.85 points, or 0.39 percent, to 17,860.00.
According to exchange data, foreign institutional investors (FIIs) were net purchasers on Tuesday in the capital markets, buying shares worth Rs 1,305.30 crore.
With inputs from Agencies.
