The rupee declined by 21 paise to 75.94 against the US dollar on Wednesday as surging crude oil prices and fuel rate hikes by the oil marketing companies fanned fears of inflation and interest rate hikes.

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However, a strong rally in the domestic equities capped the rupee's loss, forex traders said.

Development in the Russia-Ukraine conflict and the movement of crude oil prices remain the main focus for forex markets, they added.

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At the interbank foreign exchange market, the rupee opened strong at 75.65 against the American dollar but soon entered the negative territory as investors dumped riskier assets. 

During the session, it swung between a high of 75.62 and a low of 75.97.

The local unit finally settled at 75.94 against the dollar, down 21 paise from the previous close.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.42 percent to 98.02.

Global oil benchmark Brent crude futures surged 1.88 percent to USD 112.30 per barrel.

At home, oil marketing companies raised prices of petrol and diesel by 80 paise a litre each on Wednesday, taking the total increase in rates in the last nine days to Rs 5.60 per litre. 

This is the ninth increase in prices since the ending of a four-and-half-month long hiatus in rate revision on March 22.

Foreign institutional investors were net buyers in the capital market on Tuesday as they bought shares worth Rs 35.47 crore, according to stock exchange data.