The rupee slipped 2 paise to close at 81.65 (provisional) against the US dollar on Wednesday amid a strong American currency overseas and subdued market sentiments.
However, a fall in crude prices in the international market supported the local currency, forex traders said.
At the interbank foreign exchange market, the rupee opened strong at 81.59 to a dollar against the previous close of 81.63. The local unit moved in a range of 81.50 to 81.75 during the day.
It finally settled at 81.65 against the dollar, a fall of 2 paise over its previous close.
On Tuesday, the rupee had declined 21 paise to close at 81.63 against the US dollar.
Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.15 per cent to 102.08.
Brent crude was trading 0.34% lower at USD 85.84 a barrel on Wednesday.
The 30-share BSE Sensex fell 773.69 points, or 1.27 percent, to settle at 60,205.06 on the domestic equity market front. The larger NSE Nifty finished at 17,895.91, down 226.35 points, or 1.25 percent, to finish below the 18,000-level.
According to exchange data, Foreign Institutional Investors (FIIs) sold shares worth Rs 760.51 crore on Tuesday, making them net sellers in the capital market.
With inputs from Agencies.
