The rupee fell by 26 paise to close at 73.87 (provisional) against the US currency on Wednesday, tracking a strong American currency in the overseas markets ahead of the outcome of the US Fed meeting.
At the interbank foreign exchange market, the local currency opened at 73.70 and witnessed an intra-day high of 73.66 and a low of 73.93 against the US dollar in day trade.
The local unit finally settled at 73.87 a dollar, down 26 paise over its previous close. On Tuesday, the rupee had settled at 73.61 against the US dollar.
The dollar index, which gauges the greenback''s strength against a basket of six currencies, was trading 0.02 per cent higher at 93.22.
Anindya Banerjee, DVP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd., said, "The spot rupee closed 26 paise higher at 73.87 against the dollar on the back of lumpy corporate outflows. Hopes of a hawkish Fed is pushing the rupee higher. Chinese financial stress is an added positive factor. Wednesday's (September 22) Fed meeting will be watched closely. The market is expecting US Fed to announce a timeline on taper, issue inflation forecast, and update its interest rate projection via dot plot. We expect USD-INR to remain within a range of 73.40-74.20 over the near-term."
Forex traders said investors are awaiting cues on taper timeline and US Fed's projections on interest rates. The US Fed meeting outcome will be announced later in the day.
Brent crude futures, the global oil benchmark, advanced 1.24 per cent to USD 75.28 per barrel.
On the domestic equity market front, the BSE Sensex ended 77.94 points or 0.13 per cent lower at 58,927.33, while the broader NSE Nifty declined 15.35 points or 0.09 per cent to 17,546.65.
Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,041.92 crore, as per exchange data.
(With PTI inputs)