The rupee on Wednesday declined by 5 paise to close at 74.24 (provisional) against the US currency due to a stronger dollar in the overseas markets.
At the interbank foreign exchange market, the domestic currency opened flat at 74.20 and later dropped to a low of 74.30 in the day trade.
On Tuesday, the rupee had settled at 74.19 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.04 per cent higher at 92.93.
Brent crude futures, the global oil benchmark, fell 0.15 per cent to USD 70.94 per barrel.
On the domestic equity market front, the BSE Sensex ended 14.77 points or 0.03 per cent lower at 55,944.21, while the broader NSE Nifty advanced 10.05 points or 0.06 per cent to 16,634.65.
Meanwhile, foreign institutional investors were net sellers in the capital market on Tuesday as they offloaded shares worth Rs 1,644.91 crore, as per exchange data.
"Rupee market closed tad lower amid a slight pick up in dollar index with a move higher in US Treasuries ahead of Jackson Hole, later this week," said Dilip Parmar, Research Analyst, HDFC Securities.
Surge in crude oil prices in the last two days also weighed on the rupee, as Brent crude oil prices rallied around 9 per cent to USD 71 per barrel, Parmar said.
"Forex market is in overly thin market with low volume and volatility, which may remain till Monday. Spot USDINR is expected to stay in range of 74.10 to 74.50," Parmar added.