At the interbank forex market, the local unit opened lower at 73.51 against the greenback and traded in the range of 73.39 to 73.51 during the day.

The rupee finally ended at 73.42 against the American currency, registering a fall of 8 paise over its previous closing of 73.34.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.14 per cent to 90.26.

''Indian Rupee depreciated amid risk aversion in the global markets and surge in crude oil prices. Market sentiments are hurt as investors are worried over rising inflationary pressure in the US and escalating geopolitical tension between Israeli and Palestinians,'' said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Further, the rupee slipped on concern that rising COVID-19 cases in India and lockdown restriction in some states may hurt economic recovery. Market participants remained cautious ahead of CPI data from the US, Mukadam added.

However, a sharp fall was prevented on weakness in dollar and expectation of improved macroeconomic data, he said.

Brent crude futures, the global oil benchmark, were trading 0.55 per cent up at USD 68.93 per barrel.

On the domestic equity market front, the BSE Sensex ended 471.01 points or 0.96 per cent lower at 48,690.80, while the broader NSE Nifty declined by 154.25 points or 1.04 per cent to 14,696.50.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, as they pulled out Rs 336.00 crore on Tuesday, as per provisional data.

Meanwhile, India saw a record 4,205 COVID-19 fatalities in a day taking the death toll to 2,54,197, while 3,48,421 new coronavirus infections were reported, according to the Union Health Ministry data updated on Wednesday.