A man counts Indian rupee banknotes in an arranged photograph in Varanasi, Uttar Pradesh, India. Image Credit: Bloomberg

Dubai: Indian rupee fell by 4 paise to 20.31 a dirham in early trade on Wednesday reflecting the gains of the US dollar aginst the Indian currency

The UAE dirham’s peg against the dollar directly reflects its exchange rate against the Indian rupee and other currencies.

The Indian currency declined by 12 paise to 74.61 against the US dollar in opening trade on Wednesday as firm greenback and weak domestic equities weighed on investor sentiment.

At the interbank foreign exchange, the rupee opened at 74.57 against the dollar, then fell further to 74.61, registering a fall of 12 paise over its previous close.

On Tuesday, the rupee had settled at 74.49 against the US dollar.

"The Indian rupee opened weak this Wednesday tracking the broad strength of the dollar as a rise in US inflation will spur bets of a faster monetary policy tightening than previously estimated," Reliance Securities said in a research note.

Meanwhile, oil prices continued its upward trajectory, while coronavirus infections are surging in some parts of the world, which could also weigh on sentiments if outbreaks become more pronounced, the note added.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading down 0.02 per cent at 92.72.