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The U.S. dollar index surged by 0.5%, and U.S. Treasury yields experienced an uptick after the release of the data, diminishing the appeal of non-yielding bullion.
The rupee recovered on Wednesday from its record low close of 77.78 per cent in the previous session after the Reserve Bank of India hiked its key lending rate by 0.5 per cent andmaintained a hawkish stance thereby restricting significant losses for thecurrency.
The rupee gained against the dollar on Wednesday, snapping a four-session losing streak, buoyed by a recovery in domestic stocks after a five-day losing run, but the dollar's reign is likely to limit the currency's relief rally.
The rupee extended its losses on Wednesday as the dollar strengthened after Federal Reserve Governor Lael Brainard said the US central bank needs to act and take inflation head-on.
Concerns over new COVID-19 variant Omicron, as well as continued foreign fund outflows, will keep Indian rupee subdued during the upcoming week.