The rupee declined by 29 paise to close at 71.77 against the US dollar on Wednesday as fears of an impending global recession prompted investors to stick to safe-haven assets like the Japanese yen.

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Rising crude oil prices and weakness in the equity market put further pressure on the domestic currency, forex dealers said.

At the interbank foreign exchange market, the rupee opened on the back foot at 71.50 a dollar and went on to touch the day's low of 71.87. It finally pared some losses to settle at 71.77, down by 29 paise against its previous close.

On Tuesday, the rupee had zoomed 54 paise to finish at 71.48.

Global equities struggled while gold and yen held on to gains following the latest inversion of yield curves of US Treasury bonds, which is seen as a signal of an approaching recession.

With the US-China trade talks showing no signs of a resolution, chances of the global economy tipping into a slowdown remain quite high, analysts said.

"Global sentiments remained muted with uncertainty around the US-China trade deal and growth," said Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management.

Crude oil benchmark Brent Futures spurted 1.21 per cent to trade at USD 60.23 per barrel on Wednesday.

The dollar index -- which gauges the greenback's strength against a basket of six currencies -- rose 0.10 per cent to 98.09.

The 10-year Indian government bond yield was up at 6.58 per cent.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 923.94 crore on Tuesday, as per provisional data.

Meanwhile, domestic benchmark indices snapped their three-session rising streak amid losses in metals, energy, banking and auto counters.

The BSE Sensex settled 189.43 points, or 0.50 per cent, lower at 37,451.84. Similarly, the broader NSE Nifty fell 59.25 points, or 0.53 per cent, to 11,046.10.