The rupee surrendered its early strong gains and ended marginally lower by 3 paise at 64.92 against the US currency due to fresh bouts of dollar demand from corporates amid global crude woes.
Forex market sentiment suddenly turned nervous and volatile in late-afternoon deals and succumbed to heavy dollar pressure amid caution before the release of the Federal Reserve minutes later in the day.
The domestic currency scaled a fresh two-week high of 64.71 in early trade before retreating.
Growing concerns about the impact of high oil prices on India's fiscal deficit further dampened the trading mood.
However, weak dollar overseas as well as sustained capital inflows largely cushioned the fall.
Global crude prices shot up over 1 per cent on the back of supply disruption of piped Canadian crude to the US also expectations of a prolonged OPEC-led production cut also offered support.
Brent crude is trading at USD 62.98 a barrel in early Asian trade.
Meanwhile, domestic equity markets extended their winning run for the fifth-straight day led by key frontline infrastructure, PSU and auto stocks and also supported firm Asian cues.
In line with most Asian currencies, the local unit resumed higher at 64.79 from overnight close of 64.89 at the Interbank Foreign Exchange (forex) market on sustained dollar selling by foreign banks amid firm local equities.
It later rallied to hit an intra-day high of 64.71 before taking a strong reversal to trade a shorter term choppy range.
The home unit touched a low of 64.96 towards the fag-end trade before settling at 64.92, showing a small loss of 3 paise, or 0.05 per cent.
The rupee had appreciated 22 paise on Tuesday.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.7453 and for the euro at 76.0757.
In cross-currency trades, the Indian unit fell back against the Pound sterling to finish at 85.93 from 85.90 per pound and drifted against the Euro to end at 76.29 from 76.06.
The local unit also declined against the Japanese yen to conclude at 57.94 per 100 yens from 57.66.
On the global front, the greenback turned negative as as upbeat housing sector data failed to offset concerns over the long-term growth story of the US economy amid a flattening yield curve amid ongoing uncertainty over the fate of a major US tax overhaul.
The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 93.79 in early trade.
Elsewhere, Europe's common currency euro traded slightly higher against the US dollar as strong fundamentals overweigh the political uncertainty in Germany.
British pound regained some lost ground largely supported by positive headlines from the Brexit talks, where the 'divorce bill' and a potential UK-EU trade deal remain in centre-stage amid fading UK political turmoil.
In forward market today, premium for dollar continued to fall due to sustained receiving from exporters.
The benchmark six-month premium payable in April moved down to 119-121 paise from 121-122 paise and the far forward October 2018 contract also edged down to 258-260 paise from 261-262 paise yesterday.
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