The rupee declined 13 paise to close at 79.91 (provisional) against the US dollar on Wednesday, weighed down by the overall strength in the greenback and expectations of an aggressive rate hike by the US Federal Reserve.

At the interbank foreign exchange market, the local currency opened at 79.83 and finally ended at 79.91, down 13 paise over its previous close.

On Tuesday, the rupee had settled at 79.78 against the American currency.

"The Indian rupee depreciated on overall strength in the US Dollar and concerns over global economic recovery. IMF cuts India's FY23 GDP forecast to 7.4 per cent from 8.2 per cent in the previous estimates, which also weighed on Rupee," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.

Choudhary further said renewed outflows by FIIs also put pressure on the rupee. However, the positive tone in the domestic equities cushioned the downside.

"Rupee is expected to trade on a mixed to negative note on strong Dollar and expectations of an aggressive rate hike by US Federal Reserve," he said, adding there are broad market expectations of a rate hike of 75 bps. A surprise 100 bps rate hike may lead dollar higher and put pressure on riskier assets," Choudhary noted.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.19 per cent to 106.98.

Brent crude futures, the global oil benchmark, fell 0.16 per cent to USD 104.23 per barrel.

On the domestic equity market front, the BSE Sensex ended 547.83 points or 0.99 per cent up at 55,816.32 points, while the broader NSE Nifty jumped 157.95 points or 0.96 per cent to 16,641.80.

Foreign institutional investors remained net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,548.29 crore, as per exchange data.

The IMF on Tuesday cut India's growth rate by 0.8 percentage points to 7.4 per cent for the fiscal year 2022, reflecting "mainly less favourable external conditions and more rapid policy tightening".

The IMF in its World Economic Outlook update July 2022, released on Tuesday, said that the global economy, which is still reeling from the pandemic and Russia's invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook.

It projects the global economy to slow further to 3.2 per cent in 2022 from last year's 6.1 per cent.