The rupee fell 4 paise to close at 84.02 (provisional) on Wednesday amid a sharp decline in the domestic equity markets as investors stayed away from riskier assets.

However, a weak dollar against major currencies overseas and a drop in crude oil prices capped further losses in the local unit, forex traders said.

At the interbank foreign exchange market, the rupee opened at 83.96 and traded in the range of 83.95-84.01 during the day. The unit moved in a tight range of 83.95-83.97 for most part of the session.

However, it slipped at the fag-end of the trading hours to settle at 84.02 (provisional), 4 paise below its previous close of 83.98.

"...Weak domestic markets and risk aversion in the global markets pressurised the rupee. However, a decline in crude oil prices and FII inflows cushioned the downside. India’s services PMI expanded to 60.9 in August vs forecast of 60.4 and a reading of 60.3 in July," Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas, said.

At the domestic equity markets, Sensex dropped 202.80 points to settle at 82,352.64, while Nifty slipped 81.15 points to 25,198.70.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.17 per cent to 101.65.

Brent crude, the international oil benchmark, declined 0.46 per cent to 73.41 in futures trade.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 1,029.25 crore, according to exchange data.

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