The rupee declined by 7 paise to close at 68.58 against the US dollar on Wednesday, pressured by persistent foreign fund outflows and firming crude oil prices.

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A weak trend at the domestic equity markets and global trade tensions also kept sentiment subdued, traders said.

At the interbank foreign exchange market, the domestic unit opened weak at 68.61 and soon slipped to hit the day's low of 68.67. However, it pared some losses to touch a high of 68.48, before finally closing at 68.58, showing a loss of 7 paise over its previous close.

The rupee had rebounded by 15 paise to close at 68.51 against the greenback Tuesday on fag-end selling of the US currency by banks and importers in line with a late recovery in domestic equities.

"Rupee has been consolidating in the range of 68.50 and 69.20 for last five sessions. Any level below 68.50 could bring momentum buying in rupee against dollar. Rupee has managed to remain resilient in the recent past despite rising Dollar Index and Brent crude prices.

"Brent crude future is up almost 2 per cent today. In last few days, Brent crude has moved from $62.09 to $65.68. After 5 day's consecutive rise, ICE Dollar Index is trading red at 97.40, amid the market braced for Federal Reserve Chairman Jerome Powell's two days of testimony before the Congress," said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 674.26 crore Tuesday, provisional data with the exchanges showed.

The dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.03 per cent to 97.45.

Brent crude futures, the global oil benchmark, surged 1.79 per cent to $65.31 per barrel.

The 10-year government bond yield was at 6.54 per cent.

Meanwhile, equity benchmarks ended lower after choppy trade Wednesday, tracking losses in oil and gas, power, metal and auto stocks.

After swinging nearly 400 points during the day, the 30-share BSE Sensex settled 173.78 points or 0.45 per cent lower at 38,557.04.

Similarly, the broader NSE Nifty ended 57 points, or 0.49 per cent, lower at 11,498.90 in its fourth straight day of losses.