The rupee declined by 18 paise to close at 74.36 against the US dollar on Wednesday, tracking a strengthening American currency in the overseas market and higher crude prices.
However, a strong rally in domestic equities and unabated foreign fund inflows restricted the slide of the domestic unit, forex traders said.
At the interbank foreign exchange market, the local currency opened on a weak note at 74.24 and swung between the day's high of 74.18 and a low of 74.50 to the US dollar.
The rupee finally settled at 74.36 against the greenback, down 18 paise over its previous close.
The rupee had ended at 74.18 on Tuesday.