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The rupee recovered 2 paise from its all-time closing low to settle at 88.71 (provisional) against the US dollar on Wednesday, as steep tariffs and H-1B visa related issues kept the domestic unit under pressure.

Forex traders said rupee is hovering near its all-time low level on sustained foreign fund outflows amid investors' risk-aversion and trade policy uncertainty.

Moreover, enhanced US tariffs on Indian goods as well as trade policy uncertainty exacerbated the rupee's depreciation.

At the interbank foreign exchange, the rupee opened at 88.80 against the US dollar, and finally settled for the day at 88.71 (provisional), registering a recovery of 2 paise over its previous close. On Tuesday, the rupee depreciated 45 paise to close at a fresh all-time low of 88.73 against the US dollar. It had touched an all-time intraday low of 88.82 against the US dollar.

The Indian rupee is hovering near all-time low levels against the US dollar on the back of H-1B visa hike shock from the US, traders said.

"We expect the rupee to remain weak on US visa fee hike issue. Weakness in the domestic market and FII outflows may further pressurise the rupee.

"However, weakness in crude oil prices may support rupee at lower levels. Any intervention by the RBI may also support the rupee. Traders may take cues from new home sale data from the US. USD-INR spot price is expected to trade in a range of 88.40 to 89.25," said Anuj Choudhary, Research Analyst, Currency and commodities, Mirae Asset ShareKhan.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.36 per cent higher at 97.61.

Brent crude, the global oil benchmark, was trading 0.61 per cent higher at USD 68.04 per barrel in futures trade.

On the domestic equity market front, Sensex dropped 386.47 points to settle at 81,715.63, while the Nifty declined 112.60 points to 25,056.90.

Foreign Institutional Investors offloaded equities worth Rs 3,551.19 crore on Tuesday, according to exchange data.

Meanwhile, Commerce and Industry Minister Piyush Goyal is in the US for trade talks. He is accompanied by senior officials of the ministry, including special secretary and India's chief negotiator Rajesh Agrawal.

Goyal has held discussions with his US counterpart.

This visit comes in the backdrop of recently concluded day-long discussions in New Delhi between US Chief Negotiator Brendan Lynch and Agrawal on the proposed bilateral trade agreement. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)