Mumbai, March 11 The rupee declined by 4 paise to 91.89 against the US dollar in early trading on Wednesday, weighed down by outflows from foreign investors and the ongoing conflict in the Middle East.
However, a weaker US dollar and falling global crude oil prices prevented a sharper decline in the local currency, according to forex traders.
At the interbank foreign exchange market, the rupee opened at 91.92 against the US dollar before rising to 91.89, down 4 paise from its previous close.
The rupee staged a strong recovery from its record low against the US dollar on Tuesday, gaining 36 paise to settle at 91.85.
"The rupee fell to 92.19 levels on Tuesday but was able to recover due to inflows from the SBI Bond issue and the Reserve Bank of India (RBI) selling at 92.00 levels. The RBI is clearly uncomfortable with the rupee falling repeatedly and has ensured that the level of 92.00 is not breached at least for now," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
"For the day, we expect the rupee to trade in the range of 91.50-92.10," he added.
Meanwhile, Brent crude, the global oil benchmark, was trading lower by 0.38 per cent at USD 87.47 per barrel in futures trade.
The dollar index, which gauges the strength of the US dollar against a basket of six currencies, was trading 0.04 per cent lower at 98.78.
On the domestic equity market front, the Sensex dropped 96.12 points to 78,109.86 in the morning session while the Nifty was down 22.95 points to 24,238.65.
Foreign institutional investors sold equities worth Rs 4,672.64 crore on a net basis on Tuesday, according to exchange data.