Mumbai: The rupee came under a renewed selling pressure and retreated from a nearly 17-month high to end at 65.44, falling by 14 paise against the American unit on fresh dollar demand from importers.
Overall forex market sentiment turned sour after fresh bouts of global jitters took the centre-stage in the midst of mounting uncertainty over possible delay of Donald Trump's proposed economic growth agenda.
Domestic bourses endured a miserable day after recent record breaking rally and plunged more than 1 per cent, spooked by a massive sell-off on Wall Street overnight.
Forex dealers attributed the fall in the home currency to increased demand for the dollar from importers and corporates.
However, dollar's self weakness limited rupee's decline.
The Indian rupee resumed sharply lower at 65.57 from Tuesday's closing value of 65.30 at the Interbank Foreign Exchange (Forex) Market.
It remained under pressure throughout the day with currency moving in a tight range of 65.3725 and 65.58 largely trading in line with local equities and global developments.
After recouping some early steep losses, the rupee ended at 65.44, revealing a loss of 14 paise, or 0.21 per cent.
The rupee had gained 6 paise yesterday.
Meanwhile, the greenback remained under pressure on growing uncertainty over the path of US monetary policy.
The RBI fixed the reference rate for the dollar at 65.4881 and for the euro at 70.7206.
The US dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, traded modestly higher at 99.66.
In cross-currency trade, the rupee dropped further against the British pound to finish at 81.49 from 81.37 and weakened further against the euro to settle at 70.60 from 70.58 earlier.
It also fell sharply against the Japanese Yen to close at 58.81 per 100 yens as compared to 58.03 yesterday.
In the forward market, premium for dollar declined owing to to fresh receivings from exporters.
The benchmark six-month premium for August edged down to 141-143 paise from 143-145 paise and the far-forward February 2018 contract also slipped to 292-294 paise from 295-297 paise on Tuesday.
On the global commodity front, crude prices witnessed continued selling after data showed the American Petroleum Institute recorded another large rise in inventories.