The rupee depreciated 8 paise to 75.74 against the US dollar in opening trade on Wednesday as market participants were concerned about rising tensions between Washington and Beijing in the wake of the coronavirus pandemic.
Forex traders said rupee was trading in a narrow range as rising optimism about a potential coronavirus vaccine and a revival in business activity was offset by the escalation of US-China tension.
Moreover, strengthening of the American currency overseas and muted opening of domestic equities also weighed on the local unit.
The rupee opened weak at 75.72 at the interbank forex market and then fell further to 75.74, down 8 paise over its last close.
It had settled at 75.66 against the US dollar on Tuesday.
"Asian currencies were weak this Wednesday morning amid escalation of tension between the US and China. Offshore yuan was weak by 0.3 per cent and Korean won also weak by 0.3 per cent," Reliance Securities said in a research note.
China on Friday introduced the draft of a controversial national security law in Hong Kong in its parliament to tighten Beijing's control over Hong Kong.
The US, over the last few days, has expressed concerns over the new Chinese law on Hong Kong and has given indication of taking steps against it.
"He (US President Donald Trump) is displeased with China's efforts and that it's hard to see how Hong Kong can remain a financial hub if China takes over," White House Press Secretary Kayleigh McEnany told reporters at a news conference on Tuesday.
Meanwhile, in India, the death toll due to COVID-19 rose to 4,337 and the number of cases climbed to over 1.51 lakh in the country, according to the Health Ministry.
The number of cases around the world linked to the disease has crossed over 55.91 lakh and the death toll has topped 3.50 lakh.
The 30-share benchmark index, Sensex was quoting 10.07 points higher at 30,619.37 and broader Nifty rose 28.55 points to 9,057.60.
Foreign institutional investors were net buyers in the capital market, as they bought equity shares worth Rs 4,716.13 crore on Tuesday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.22 per cent to USD 36.09 per barrel.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.25 per cent to 99.15.