The Indian rupee pared initial gains and settled 2 paise lower  provisionally at 81.90 against the US dollar on Wednesday after Finance Minister Nirmala Sitharaman presented the Union Budget for 2023-24.

At the interbank foreign exchange market, the rupee which  opened at 81.76 against the greenback finally settled at 81.90, down 2 paise over its previous close. During the session, the rupee floated an intraday high of 81.68 and a low of 82.03 against the USD.

On January 31, the rupee depreciated by 36 paise to close at a 3-week low of 81.88 against the greenback after the Economic Survey 2022-23 said the domestic unit may remain under pressure on account of plateauing of exports and subsequent widening of the current account deficit.

Forex traders said investors stayed on the sidelines, as they are waiting for the outcome of the US Federal Reserve meeting later in the evening.

Sitharaman maintained the nation's 6.4 percent fiscal deficit target in her budget speech but reduced it to 5.9 percent for FY24 from FY23's revised estimate. By 2025–2026, the fiscal deficit, she said, is to be reduced to less than 4.5 percent.

According to figures from the finance ministry issued on Tuesday, the government's fiscal deficit as of December 31 reached 59.8% of the full-year Budget Estimate due to a slow growth in revenue collections.

According to a monthly poll, India's manufacturing sector activity slowed in January despite a slower growth in overall sales, and headcounts were mostly steady because there was enough workers to meet demand.

The S&P Global India Manufacturing Purchasing Managers' Index (PMI), which is seasonally adjusted, dropped from a recent high of 57.8 in December to 55.4 in January as industrial orders and production increased more slowly.

The dollar index, which measures the strength of the dollar relative to a basket of six different currencies, was down 0.14 percent at 101.95.

Brent crude futures, the benchmark for all crude oil, fell 0.26 percent to USD 85.24 per barrel.

Reacting to the Budget, the NSE Nifty fell 45.85 points or 0.26 percent to 17,616.30, while the 30-share BSE Sensex ended 187.31 points or 0.31 percent higher at 59,708.08.

According to exchange data, foreign institutional investors (FIIs) were net sellers on Tuesday in the capital market, selling shares worth Rs 5,439.64 crore.

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