The rupee fell 11 paise to close at 74.49 provisional against the US dollar on Thursday, as a result of the hawkish US Fed minutes.
The minutes from the Federal Reserve meeting showed that the US central bank might hike interest rates faster than anticipated in order to cool inflation, and could lead to outflows from domestic markets, forex traders said.
According to minutes from the Fed's December 14 -- 15 policy meeting, policymakers believe that the US job market is nearly healthy and ultra-low interest rates are no longer needed.
The local currency opened at 74.44 and saw an intra-day high of 74.32 and a low of 74.51 against the US dollar.
The local unit finally settled at 74.49, down 11 paise over its previous close of 74.38.
The dollar index, which shows the strength of the dollar against a basket of six currencies, was trading 0.05 per cent higher at 96.22.
The dollar gained against most Asian currencies as the market assessed the US Fed's hawkish views. The rupee was also feeling the heat and depreciated along with other Asian currencies, but the pace was relatively low as Reliance Industries received good response for their dollar bonds, said Dilip Parmar, Research Analyst, HDFC Securities.
Reliance Industries Ltd, the nation's most valuable company, has raised USD 4 billion around Rs 30,000 crore in debt through the largest foreign currency bond issue by an Indian entity.
Growing concerns over the Omicron variant of coronaviruses and its impact on economic recovery and firm crude oil prices weighed on the local unit.
The global oil benchmark, Brent crude futures, increased by 0.39 per cent to USD 79.29 per barrel.
On the domestic equity market front, the BSE Sensex ended 621.31 points or 1.03 per cent lower at 59,601. The NSE Nifty was 84, while the broader NSE dropped 179.55 points or 1 per cent to 17,745. Foreign institutional investors purchased shares worth around 336.83 crore, as per exchange data, which remained net buyers in the capital market on Wednesday.