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The Indian rupee ended 23 paise lower at 79.98 as most traders were in risk-averse mode ahead of Fed policy announcement, dealers said.

At Interbank foreign exchange market, rupee ended at 79.98 as against 79.75 close on the previous trading session against the US dollar.

"The rupee closed at a record low following broad-based strength in the greenback and risk-averse moods. The dollar appreciated against major currencies ahead of an expected interest-rate hike by the Federal Reserve and as Russia's escalation of war enervated investors' appetite for risk," said Dilip Parmar, Research Analyst at HDFC securities.

Parmar added that with a third 75 basis point rate hike by the Federal Open Market Committee widely expected, some investors have moved to price in an even larger increase.

"Focus will be on Fed's forecast on growth, inflation and terminal rates. Bias remains upward. USDINR can play within a range of 79.50 to 80.30 over the near term," said Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd.

The market participants were fretful after Russian President Vladimir Putin announced a "partial mobilisation" of troops in Ukraine.

The dollar index, which gauges the the strength of greenback against the basket of six major currencies, was at 110.347.

Brent crude oil price was at $93.12 a barrel by the closing of Indian market hours.

Meanwhile, the benchmark indices ended lower on Wednesday as most investors remained cautious ahead of US Federal Reserve policy announcement, dealers said.

Sensex ended down 262.96 points or 0.44 per cent at 59,456.78, while Nifty closed 97.90 points or 0.55 per cent at 17,718.35.