The rupee edged lower against the US dollar on Wednesday tracking weakness across most Asian currencies. The rupee declined by 10 paise - or 0.14 per cent - to 73.56 against the greenback at the weakest level recorded during the four-hour session, after starting the day marginally weaker at 73.51 compared to its previous close of 73.46. Gains in domestic equity markets, however, provided some support to the rupee.
Domestic stock markets recovered early losses to push higher for the fifth straight session in a row. The S&P BSE Sensex index jumped as much as 329.16 points - or 0.83 per cent - to 39,903.73 at the highest level of the day, whereas the broader NSE Nifty 50 benchmark climbed to as high as 11,747.85, up 85.45 points - or 0.73 per cent - from its previous close.
The dollar index - which gauges the greenback against six currencies - was last seen trading 0.16 per cent higher, having gained as much as 0.23 per cent earlier.
Analysts say the rupee is likely to trade in a narrow range in the near term.
"The rupee continues to follow a trading pattern wherein nationalised banks aggressively buy the dips to 73.10-73.15 and buy all the way up to 73.45-73.50, said Abhishek Goenka, founder and CEO of forex advisory firm IFA Global.
"Considering the fact that foreign direct investment-related inflows are lined up and the reaction function of nationalised banks, we expect the rupee to continue trading in the 72.90-73.90 range," he said.
US President Donald Trump on Tuesday instructed his officials to stop negotiating with the House Democrats on the coronavirus stimulus.
Crude oil prices fell on Wednesday amid dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy and on a larger-than-expected increase in US crude inventories.
Brent crude futures - the global benchmark for crude oil - fell 1.6 per cent to $41.95 per barrel.
"Overall risk sentiment was holding up until Trump said he was holding back the talks on fiscal stimulus until after the election. The yield on the US 10-year bond touched the highest level since June this year but retreated post the US President's comment," Mr Goenka added.
Meanwhile, the Reserve Bank of India's Monetary Policy Committee began a three-day review meeting on Wednesday.
Foreign institutional investors net bought Indian shares worth Rs 1,101.76 crore on Tuesday, according to provisional exchange data.