The Indian rupee settled 6 paise lower at 70.90 to the US dollar on Wednesday as participants exercised caution ahead of the Federal Reserve’s monetary policy decision.However, the rupee loss was somewhat capped by unabated foreign fund inflows, domestic stocks rally and lower crude oil prices.

Starting off weaker, the domestic currency went on to hit a low of 71.03 against the US dollar during the day. It, however, claimed some of its lost ground to settle at 70.90, showing a fall of 6 paise over its previous close.

“Rupee failed to move out of the range and continued to consolidate in a narrow range as most market participants remained cautious ahead of the important FOMC policy statement that will be released today.

Globally, markets are keenly awaiting the outcome of the all-important Federal Open Market Committee monetary policy decision, which will be announced at 1800 GMT on Wednesday.

Continuing with their bullish outlook, foreign institutional investors bought equities worth Rs 7,192.42 crore on Wednesday, exchange data showed.Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03 per cent to 97.66.

“Expectation is that the central bank could cut rates by 25 bps and adopt a hawkish stance thereby keeping the dollar supported on lower level,” said Gaurang Somaiyaa, forex and bullion analyst, Motilal Oswal Financial Services.