The rupee depreciated 9 paise to close at 75.72 against the US dollar on Wednesday, following a strong American currency overseas and fears of a renewed trade war between the US and China.
Forex traders said the weakness in the rupee was largely due to the strengthening of the US dollar and sustained foreign fund outflows.
Moreover, rising coronavirus cases in the country also weighed on the local unit.
Rupee opened weak at 75.77 at the interbank forex market and then pared some losses to finally settle at 75.72, down 9 paise over its last close.
It had settled at 75.63 against the US dollar on Tuesday.
"The risk tone has been tepid and will remain like that on renewed US-China spat. The trade war can reignite going ahead and prop up the safe haven dollar demand.
"Also, coronavirus cases are increasing, stocking fears of second wave of infection. Locally, there are concerns over macros, due to the extension in lockdown, India's GDP is expected to fall near 1 per cent. While, market is eagerly waiting for more stimulus measures from the government," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.
Foreign institutional investors remained net sellers in the capital market, as they sold equity shares worth Rs 1,059.39 crore on Tuesday, according to provisional exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.40 per cent to 100.10.
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