The rupee declined by 7 paise to close at 83.36 (provisional) against the US dollar on Wednesday, tracking a strong American currency against major rivals overseas and weak Asian peers.

However, a surge in domestic markets and a decline in crude oil prices cushioned the downside, forex traders said.

At the interbank foreign exchange market, the local unit opened at 83.33 and touched an intraday low of 83.45 against the greenback. The local unit finally settled at 83.36 (provisional) against the dollar, registering a loss of 7 paise from its previous close.

On Tuesday, the rupee recovered from all-time low levels and appreciated 32 paise to close at 83.29 against the US dollar.

According to Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas, the Indian rupee depreciated on Wednesday on strong US dollar and importer demand for US dollar. Weak Asian currencies also weighed on the rupee.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 104.26.

"We expect the rupee to trade with a slight negative bias on strength in the US Dollar and weak Asian currencies. Demand for dollars from importers towards the end of the month may also weigh on the rupee.

"However, positive domestic markets may support the rupee at lower levels. Investors may watch out for core PCE deflator index data from the US on Friday. USDINR spot price is expected to trade in a range of Rs 83.10 to Rs 83.60," Choudhary said.

Brent crude futures, the global oil benchmark, fell 0.90 per cent to USD 85.47 per barrel.

On the domestic equity market front, Sensex advanced 526.01 points, or 0.73 per cent, to settle at 72,996.31 points. The Nifty rose 118.95 points, or 0.54 per cent, to close at 22,123.65 points.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Tuesday as they purchased shares worth Rs 10.13 crore, according to exchange data.

On the macroeconomic front, India's current account deficit narrowed to USD 10.5 billion or 1.2 per cent of GDP in the October-December quarter as against USD 11.4 billion or 1.3 per cent in the preceding three months ending September, the Reserve Bank said on Tuesday.

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