The rupee pared initial gains to settle 14 paise lower at 76.32 (provisional) against the US dollar on Wednesday due to month-end dollar demand from importers and rising crude prices amid geopolitical uncertainties.
At the interbank foreign exchange market, the rupee opened strong at 76.08 against the American currency but could not hold the momentum and entered negative territory during the session.
The domestic unit finally settled at 76.32 against the greenback, down 14 paise from the previous close.
On Tuesday, the rupee had settled flat at 76.18 against the American currency.
Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd, said, "USDINR spot closed at 76.30, up 12 paise, due to demand for $ from oil marketing companies. Weakness in stocks and higher oil prices also were responsible for the Rupee weakness. Over the near term, we expect a range in USDINR , between 75.80 and 76.50 on spot, due to higher oil supporting USD and year end exporter selling, capping the advance in the pair."
''Indian rupee depreciated for the third day in a row following dollar demands from importers ahead of the month and financial year-end and rebound in crude oil prices,'' said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar further added that global financial markets have been searching for clear direction on the back of ongoing geopolitical uncertainties. The US Fed's hawkish bet has been supporting gain in the dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.14 per cent higher at 98.63.
Global oil benchmark Brent crude futures jumped 2.16 per cent to USD 117.97 per barrel.
On the domestic equity market front, the 30-share Sensex ended 304.48 points or 0.53 per cent lower at 57,684.82, while the broader NSE Nifty fell 69.85 points or 0.4 per cent to 17,245.65.
Foreign institutional investors emerged as net buyers in the capital market on Tuesday, as they purchased shares worth Rs 384.48 crore, according to stock exchange data.
(With PTI inputs)