Snapping its three-session winning streak, the Indian rupee tumbled 28 paise to close at 70.97 against the US dollar on Wednesday as continuing uncertainty over the US-China trade deal affected currency market sentiment worldwide.
However, robust foreign fund inflows and easing crude oil prices restricted the fall for the domestic unit, forex brokers said.
At the interbank foreign exchange market, the rupee opened at 70.80 and skidded to 71.01 against the greenback intra-day. The local unit finally settled at 70.97, down 28 paise over its previous close.
Rahul Gupta, Emkay Global Financial Services' Head of Currency, said the rupee-dollar spot market has been in a depreciating mode for the past three weeks as US and China have been hinting at a phase one' trade deal anytime this month.
"Depreciation is getting capped as market has started getting doubtful of the silence amid China's attempts to push the US to remove more tariffs," Gupta added.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.14 per cent to 97.84.
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Meanwhile, foreign institutional investors bought equities worth a net Rs 1,011.49 crore on Wednesday, provisional exchange data showed.
"Indian rupee under-performed the most amongst the Asian basket by plunging more than 30 paise against the dollar to trade at 71," said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.
Sharma further said the "rupee did not react negatively towards spike in crude prices and Dollar index in the recent past and perhaps today it has restored the parity with the dollar."