Indian rupee ended at day's low at 74.55 per dollar after Reserve Bank of India’s monetary policy committee kept the key rates unchanged and also retained ‘accommodative’ stance.
It opened 13 paise lower at 73.55 per dollar against previous close of 73.42 and trade in the range of 73.51-74.55.
At close, the Sensex was up 460.37 points or 0.94% at 49,661.76, and the Nifty was up 135.50 points or 0.92% at 14,819.
"RBI kept the rates unchanged and the policy accommodative. Rupee weakened to 73.75 as demand for dollar outstripped supply. Exporters to keep selling dollar while importers to wait for hedging. Range for the day 73.50 to 74," said Anil Kumar Bhansali, Head- Treasury, Finrex Treasury Advisors.
The dollar softened to a two-week low against a basket of currencies on Wednesday after U.S. bond yields declined as traders rolled back aggressive expectations that the Federal Reserve will tighten its policy earlier than pledged.
Gold prices inched lower on Wednesday, retreating from a two-week high hit in the previous session, as a raft of strong U.S. data boosted hopes of a quick economic recovery.
Oil prices edged higher on Wednesday on the prospects for stronger global economic growth amid increased COVID-19 vaccinations and a report that crude inventories in the United States, the world's biggest fuel consumer, fell.
The US dollar rebounded from a near two-week low on Tuesday as short-term optimism about the outlook for the US economy prompted investors to consolidate positions after a selloff overnight. However, continued Put writing may keep downsides limited while declines remain a buying opportunity, said ICICI Direct.