Mumbai, March 11 The rupee declined by 16 paise to close at 92.01 against the US dollar on Wednesday, weighed down by a sharp rise in global crude oil prices and a stronger US dollar as the war in West Asia continued.
Forex traders said that outflows from foreign institutional investors and weak sentiment in the domestic equity markets further put pressure on the local currency.
At the interbank foreign exchange market, the rupee opened at 91.92 against the US dollar and traded in the range of 91.85-92.06 before closing at 92.01, down 16 paise from its previous closing level.
On Tuesday, the rupee staged a strong recovery from its record low and gained 36 paise to close at 91.85 against the US dollar.
"The rupee declined due to weak domestic markets and a recovery in crude oil prices overnight. Risk-off sentiment in global markets and FII outflows may continue to put pressure on the rupee. Markets will also watch for geopolitical developments in West Asia," said Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan.
"Traders may take cues from CPI data from the US. The USD-INR spot price is expected to trade in the range of 91.70-92.40," he added.
The dollar index, which gauges the strength of the US dollar against a basket of six currencies, was trading at 98.96, up 0.14 per cent.
Brent crude, the global oil benchmark, was trading higher by 5.44 per cent at USD 92.58 per barrel in futures trade.
On the domestic equity market front, the Sensex fell by 1,342.27 points or 1.72 per cent to close at 76,863.71, while the Nifty plummeted by 394.75 points or 1.63 per cent to 23,866.85.
Foreign institutional investors sold equities worth Rs 6,267.31 crore on a net basis on Wednesday, according to exchange data.