Analysts said higher opening in domestic equities supported the rupee. The S&P BSE Sensex index rose as much as 174.25 points in early trade to 36,898.99, and the broader NSE Nifty benchmark moved to 10,920.10, up 75.45 points from the previous close.

Market participants, however, said that sustained foreign fund outflows and rising crude prices weighed on local currency that restricted the rise.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 1,738.49 crore on Wednesay, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.07 per cent to trade at $60.74 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.03 per cent to 98.48.

On the global front, US President Donald Trump said that China has taken advantage of the US and the World Trade Organisation (WTO). Trump said China will make a deal, if they want.

The rupee has witnessed a significant decline since the start of this year amid sustained foreign fund outflows and weak macroeconomic environment.

According to news agency Reuters, the rupee will not regain ground lost against the dollar in the coming year. After gaining about 2 per cent following a victory in the general election by the incumbent government late in May, the rupee has lost nearly 6 per cent since July 5 budget when a surcharge on foreign investments was introduced.

That pushed international investors to turn net sellers after being net buyers until then from February. Although those higher taxes were withdrawn last month, the move did not alleviate the rupee's weakness, the report said.