At the interbank foreign exchange market, the domestic currency opened at 74.57 against the American currency, and slipped further to close at 74.59, registering a decline of 10 paise over its previous close. On Tuesday, the rupee had closed at 74.49 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.05 per cent to 92.70.
"The market focus is on how Jerome Powell will react to the surging US CPI data and how long can Federal Reserve policy stay ultra-loose. Powell’s dovish tone at tonight's semi-annual testimony, will be negative for USDINR spot but if he talks about tapering the bond purchases then we may see the spot to trade towards 75 zone," said Rahul Gupta, Head Of Research- Currency, Emkay Global Financial Services.
As long as the spot trades above 74.40, the trend will remain positive, only a break of 74.40 will push prices towards 74.00 zone, Gupta added.
On the domestic equity market front, the BSE Sensex ended 134.32 points or 0.25 per cent higher at 52,904.05, while the broader NSE Nifty advanced 41.60 points or 0.26 per cent to 15,853.95.
Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 113.83 crore, as per exchange data.
Brent crude futures, the global oil benchmark, fell 0.75 per cent to USD 75.92 per barrel.