The rupee pared initial gains and settled for the day in the negative territory, down 11 paise at 91.79 (provisional) against the US dollar, as the support from the retreating dollar index was negated by sustained foreign fund outflows.
Forex traders said the rupee opened higher as the US dollar index softened and a long-awaited trade breakthrough with Europe offered quiet reassurance. However, selling pressure from foreign funds and ongoing geopolitical tensions dented investors' sentiments.
At the interbank foreign exchange, the rupee opened at 91.60 and touched an early high of 91.50, but pared the gains to touch an intra-day low of 91.83 against the greenback.
The domestic unit settled at 91.79 (provisional), down by 11 paise from its previous close.
On Tuesday, the rupee rebounded from its all-time low levels and gained 22 paise to close at 91.68 against the US dollar.
Forex traders said the rupee opened higher as the US dollar index softened and a long-awaited trade breakthrough with Europe bolstered investor sentiment.
India and the European Union on Tuesday announced the conclusion of negotiations for the free trade agreement (FTA), under which a number of domestic sectors such as apparel, chemicals and footwear will get duty-free entry into the 27-nation bloc, while the EU will get access to the Indian market at concessional duty for cars and wines, an official said.
The deal has been dubbed the "mother of all deals" as it will create a market of about 2 billion people.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.07 per cent lower at 96.14.
Brent crude, the global oil benchmark, was trading 0.43 per cent lower at USD 67.28 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 487.20 points to settle at 82,344.68, while Nifty surged 167.35 points to 25,342.75.
Foreign Institutional Investors offloaded equities worth Rs 3,068.49 crore on Tuesday, according to exchange data.
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