The rupee settled for the day on a flat note at 83.51 (provisional) against the US dollar on Wednesday, as the support from easing crude oil prices was negated by strong dollar demand.
Forex traders said a muted trend in domestic equities and significant foreign fund outflows dented investors' sentiments.
At the interbank foreign exchange market, the local unit traded in a narrow range. It opened at 83.50, and touched an intraday high of 83.49 and a low of 83.52 during the day. The local unit finally settled for the day at 83.51 (provisional), unchanged from its previous close.
On Tuesday, the rupee closed at 83.51 against the American currency.
"The Indian rupee traded flat to negative on weak domestic markets and strong US dollar. FII outflows also weighed on the rupee. However, a decline in crude oil prices cushioned the downside," said Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas.
"We expect the rupee to trade with a slight negative bias amid strength in the greenback and continued selling pressure by foreign investors. Positive global equities may support riskier currencies.
"Weaknesses in crude oil prices may support the rupee at lower levels. The USD-INR spot price is expected to trade in a range of ₹83.30 to ₹83.75," Choudhary added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 105.53, higher by 0.12 per cent as the US dollar gained on hawkish Fedspeak and geopolitical tensions in the Middle East.
Brent crude futures, the global oil benchmark, fell 1.37 per cent to $82.02 per barrel.
On the domestic equity market, the 30-share BSE Sensex fell 45.46 points, or 0.06 per cent to close at 73,466.39 points. The broader NSE Nifty settled flat at 22,302.50 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday as they offloaded shares worth ₹3,668.84 crore, according to exchange data.