The rupee declined 49 paise to 75.82 against the US dollar in opening trade on Wednesday amid a weak risk appetite as tensions escalated in Eastern Europe.
Forex traders said sustained foreign fund outflows, a lacklustre trend in domestic equities and elevated crude oil prices weighed on investor sentiment.
At the interbank foreign exchange, the rupee opened at 75.78 against the US dollar, then slipped further to 75.82, registering a decline of 49 paise from the last close.
On Monday, the rupee had settled at 75.33 against the US dollar.
The forex market was closed on Tuesday on account of Mahashivratri.
"The Rupee opened gap down against the US Dollar this Wednesday, tracking a rebound in the dollar index after ceasefire negotiations between Russian and Ukraine forces failed," said Sriram Iyer, Senior Research Analyst at Reliance Securities.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.01 per cent to 97.41.
Stronger crude oil prices and weaker Asian currencies against the US Dollar could weigh on sentiments, Iyer said.
Meanwhile, global oil benchmark Brent crude futures jumped 5.15 per cent to USD 110.38 per barrel.
Markets will continue to remain volatile, and trade will continue surrounding headlines in Eastern Europe. The RBI could be present to curb excess volatility, Iyer added.
On the domestic equity market front, the 30-share Sensex was trading 748.79 points or 1.33 per cent lower at 55,498.49, while the broader NSE Nifty slipped 177.20 points, or 1.06 per cent, to 16,616.70.
Foreign institutional investors remained net sellers in the capital market on Monday as they offloaded shares worth Rs 3,948.47 crore, as per stock exchange data.
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