On Tuesday, the rupee depreciated 3 paise to close at 83.98 against the American currency.
The rupee witnessed range-bound trade and settled for the day on a flat note at 83.98 (provisional) against US dollar on Wednesday as the support from the lower level of crude oil prices and soft US dollar was negated by a weak trend in domestic equities.
Forex traders said significant corrections in asset classes like the dollar index and crude oil prices supported the rupee, while a negative trend in domestic equities and concerns over global economic growth capped the upside.
At the interbank foreign exchange market, the local unit moved in a narrow range. It opened at 83.97 against the American currency and touched an intraday high of 83.93 and a low of 83.98 against the American currency.
The rupee finally settled for the day at 83.98 (provisional) against the US dollar.
On Tuesday, the rupee depreciated 3 paise to close at 83.98 against the American currency.
"Indian rupee continued to remain range-bound stuck in a 83.90-84 range supported by active interventions from RBI at lower levels along with declining crude oil prices also capping the upside in same," said Maneesh Sharma, AVP - Commodities & Currencies, Anand Rathi Shares and Stock Brokers.
Sharma further noted that rupee's minimal volatility is also attributed to the Reserve Bank of India (RBI) maintaining long-term interest rate pauses and building record foreign exchange reserves.
"Overall rupee is expected to maintain a trading range of 83.90-84.10 in the week ahead with minimal volatility with cues from US CPI & ECB interest rate decision in coming days to provide further direction to currency pair," Sharma added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.23 per cent to 101.39 points.
Brent crude, the international benchmark, was trading higher by 2.44 per cent to USD 70.88 per barrel in futures trade.
Forex traders said crude oil level of USD 70 per barrel will act as a support for the domestic unit as India, the world's third-largest oil importer, stands to benefit from cheaper oil.
On the domestic equity market, the 30-share BSE Sensex declined 398.13 points, or 0.49 per cent, to 81,523.16 points, while the Nifty was down 122.65 points, or 0.49 per cent, to 24,918.45 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 2,208.23 crore, according to exchange data.