The rupee slumped 17 paise to 73.51 against the US dollar in opening trade on Wednesday tracking weak domestic equities and strong American currency.
Forex traders said investors are awaiting cues from the US CPI and domestic inflation and IIP numbers. Besides, concerns over rising COVID-19 cases also weighed on sentiment.
At the interbank foreign exchange, the domestic unit opened lower at 73.51 against the dollar, registering a fall of 17 paise over its previous close.
On Tuesday, the rupee had closed at 73.34 against the US dollar.
"Most Asian currencies are trading weaker against the dollar and could weigh on sentiments," Reliance Securities said in a research note.
On the domestic equity market front, the 30-share BSE Sensex was trading 382.61 points or 0.78 per cent lower at 48,779.20. Similarly, the broader NSE Nifty slipped 106.70 points or 0.72 per cent to 14,744.05.
Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they pulled out Rs 336.00 crore on Tuesday, as per provisional data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.27 per cent at 90.38 ahead of US CPI inflation later in the day.
"Higher inflation number might add pressure on the Fed to bring forward rate rises, but currency markets have been soothed by repeated promises of patience from Fed speakers," the Reliance Securities note said.
Brent crude futures, the global oil benchmark, was trading up 0.01 percent at $68.56 per barrel.
Meanwhile, India saw a record 4,205 COVID-19 fatalities in a day taking the death toll to 2,54,197, while 3,48,421 new coronavirus infections were reported, according to the Union Health Ministry data updated on Wednesday.
The total tally of COVID-19 cases in the country now stands at 2,33,40,938.