The Indian rupee was hovering near its all-time low on Wednesday, wedged between weakness in local equities and dollar sales by state-run banks.

Forex traders said the downward pressure on the USD/INR pair is largely driven by persistent inflation and significant foreign outflows.

The Indian rupee closed nearly unchanged on Wednesday, as dollar sales by state-run banks helped the currency withstand pressure from equity outflows and persistent strength in the U.S. dollar.

The Indian rupee touched its all-time low on Tuesday, pressured by the dollar's rise to a more than four-month peak and on likely outflows from local equities.