The rupee depreciated by 43 paise to 79.60 against the US dollar in opening trade on Wednesday, as higher-than-expected US CPI print resulted in massive risk-off sentiments.
At the interbank foreign exchange market, the rupee opened at 79.58 against the greenback, then fell to 79.60, registering a decline of 43 paise over its last close. In initial deals, the local unit also touched 79.54 against the dollar.
On Tuesday, the rupee appreciated by 36 paise to close at an over one-month high of 79.17 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.03 per cent to 109.77.
Global oil benchmark Brent crude futures fell 0.10 per cent to $92.91 per barrel.
The US August CPI came in higher than expected at 8.3 per cent year-on-year and 0.6 per cent month-on-month.
"The higher-than-expected print has raised the prospect of more aggressive monetary policy tightening by the US Fed. Markets now expect the terminal Fed Funds rate to be 4.25 per cent. Markets are also attributing a 20 per cent chance of a 100 basis point hike in the policy next week," according to IFA Global Research Academy.
Higher than expected US CPI print has resulted in massive risk-off moves across assets, it said, adding that the dollar has turned around overnight and strengthened across the board.
Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth ₹1,956.98 crore, as per exchange data.