The rupee declined by 26 paise to close at 80.00 (provisional) against the US dollar on Wednesday, tracking the strength of the American currency in the overseas market and a muted trend in domestic equities.

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Forex traders said investors are awaiting the US Fed's policy decision on interest rates for further cues. Moreover, risk-off mood and firm crude oil prices weighed on the local unit.

At the interbank foreign exchange market, the domestic currency opened at 79.81 per dollar. It hovered in a range of 79.79 to 80.00 during the session.

The rupee finally settled at 80.00, down 26 paise over its previous close.

On Tuesday, the rupee had closed 7 paise higher at 79.74.

"The dollar appreciated against major currencies ahead of an expected interest rate hike by the Federal Reserve and as Russia's escalation of war enervated investors' appetite for risk," said Dilip Parmar, Research Analyst, HDFC Securities.

With a third 75-basis-point rate hike by the Federal Open Market Committee widely expected, some investors have moved to price in an even larger increase, Parmar said.

The market participants were fretful after Russian President Vladimir Putin announced a "partial mobilisation" of troops in Ukraine.

"Spot USD-INR is placed at the upper band of the range and sustainable trade above 80 would open 80.70 in the near term while the support will shift to 79.25," Parmar added.

In August, the rupee had fallen to its all-time low of 80.15 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.31 per cent higher at 110.55.

Brent crude futures, the global oil benchmark, fell by 2.36 per cent to USD 92.76 per barrel.

On the domestic equity market front, the BSE Sensex ended 262.96 points or 0.44 per cent lower at 59,456.78, while the broader NSE Nifty declined 97.90 points or 0.55 per cent to 17,718.35.

Foreign institutional investors were net buyers in the capital market on Tuesday as they purchased shares worth Rs 1,196.19 crore, as per exchange data.