In opening trade, the Indian currency depreciated 21 paise to 74.65 against the US dollar. Rising crude prices and strength of the US dollar in the overseas market weighed on investor sentiments.
At the interbank foreign exchange, the rupee opened on a weak note at 74.63, then fell further to 74.65, registering a decline of 21 paise from the last close.
On Tuesday, the rupee had settled at 74.44 against the US dollar.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.14 per cent to 94.11.
According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, there was no effect of Moody''s upgrade of India's rating outlook to ''stable'' from ''negative'', on the rupee as the sovereign rating has not been restored.
As oil touched $83 per barrel, the rupee has weakened, Bhansali said, adding that the range for the rupee would be 74.30 to 74.80. "Rupee is awaiting for monetary policy which is starting (MPC meet) today. Exporters will sell only above 74.80 and importers will buy near 74.40/45 levels for their near-term exposure," he said.
On Tuesday, Ratings agency Moody's upgraded the country's outlook to 'stable' from 'negative.' The decision to change the outlook to stable reflects Moody’s view that the downside risks from negative feedback between the real economy and financial system are receding.
In other words, economic recovery is in progress and moving towards an upwards trajectory. It also signals that activity is gradually picking up in most sectors.
At the same time, the agency has affirmed India’s Baa3 sovereign rating, which is the lowest investment grade, just a notch above junk status.
FIIs net sellers on Tuesday
Foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,915.08 crore, as per exchange data.
On the domestic equity market front, the 30-share Sensex was trading 77.72 points or 0.13 per cent lower at 59,667.16 tracking gains in HDFC, SBI and Bajaj Finance amid a positive trend in US equities. The broader NSE Nifty was trading 27.45 points or 0.15 per cent down at 17,794.85.
Global oil benchmark Brent crude futures fell 0.08 per cent to $82.49 per barrel.
(With PTI inputs)