The rupee depreciated 4 paise to 82.64 against the US dollar in early trade on Wednesday as a strengthening greenback overseas and risk-off sentiment among investors ahead of the US Fed's interest rate decision weighed on the local unit.
However, a firm trend in domestic equities supported the domestic currency, forex dealers said.
At the interbank foreign exchange, the domestic unit opened flat at 82.60 against the dollar, then lost some ground to quote at 82.64, registering a decline of 4 paise over its previous close.
In early deals, the rupee was moving in a tight range of 82.60-82.65.
In previous session on Tuesday, the rupee settled 9 paise lower at 82.60 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.11 per cent to 104.09.
Brent crude futures, the global oil benchmark, fell 0.33 per cent to USD 80.41 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 238.75 points or 0.38 per cent higher at 62,772.05. The broader NSE Nifty rose 59.40 points or 0.32 per cent to 18,667.40.
The US inflation for November was recorded at 7.1 per cent annually against an annual gain of 7.7 per cent in October, triggering hopes that the US Federal Reserve might be less hawkish in raising interest rates. The Fed is widely expected to raise its benchmark rate by 0.50 percentage points on Wednesday.
Foreign Institutional Investors (FIIs) turned net buyers in capital markets on Tuesday as they bought shares worth Rs 619.92 crore, according to exchange data.
With inputs from Agencies.
