The rupee depreciated 16 paise to 73.95 against the U.S. dollar in opening trade on December 22 tracking muted domestic equities and weakened risk appetite amid concerns about a new virus strain.
Traders said rupee is trading on a weak note against the U.S. dollar as the greenback rebounded amid safe-haven appeal for the currency.
At the interbank forex market, the domestic unit opened at 73.95 against the U.S. dollar, registering a fall of 16 paise over its previous close.
On December 21, the rupee plunged 23 paise to end at a two-week low of 73.79 against the U.S. dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.26% to 90.27.
"The risk sentiment was jolted by the news of a new strain of virus emerging in the U.K. and consequently about 40 countries imposing bans on flights arriving from the U.K.," said Abhishek Goenka, Founder and CEO, IFA Global.
The variant, which officials say is up to 70% more transmissible than the original, triggered concerns about a wider spread which has prompted several European countries to take measures to prevent people arriving from Britain, including bans on flights and trains, Reliance Securities said in a research note.
Further, Asian currencies were weak this morning and could weigh on sentiments, the note added.
On the domestic equity market front, the 30-share BSE benchmark Sensex was trading 6.65 points lower at 45,547.31 and the broader NSE Nifty fell 2.10 points to 13,326.30.
Foreign institutional investors were net sellers in the capital market as they offloaded shares worth ₹323.55 crore on a net basis on December 21, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.51% to $50.56 per barrel.