MUMBAI: The rupee pared initial gains and settled for the day lower by 8 paise at 89.71 against the US dollar on Wednesday, fuelled by persistent capital withdrawals from foreign investors, alongside heightened greenback demand from bullion importers.

Forex traders said despite the central bank’s announcement of USDINR VZDSV DQG 2SHQ 0DUNHW 2SHUDWLRQV 202 WKH measures failed to boost market sentiments, amid strong dollar demand and rising crude oil prices.

At the interbank foreign exchange, the rupee opened at 89.56 against the US dollar, then touched an intra-day high of 89.51, registering a 12-paise gain from its previous close.

At the end of the trading session on Wednesday, the rupee pared its initial gains and was quoted at 89.71, down 8 paise from its previous close.

On Tuesday, the rupee settled at 89.63 against the US dollar.

The decline in the USD/ INR pair was driven by a shift toward risk aversion, fuelled by persistent capital withdrawals from foreign investors leading up to the holiday break, alongside heightened greenback demand from bullion importers, said Dilip Parmar, senior research analyst, HDFC Securities.

“Despite the central bank’s announcement of 86',15 VZDSV DQG 202 the measures failed to ignite market enthusiasm as they did little to bridge the widening gap between dollar supply and demand ahead of year-end,” Parmar noted.