The rupee depreciated 11 paise to settle at 83.45 (provisional) against the US dollar on Monday, tracking rising crude oil prices in international markets.
However, a firm trend in domestic equity markets, positive manufacturing PMI data and a weak US dollar against major currencies overseas capped the sharp fall, forex traders said.
At the interbank foreign exchange market, the local unit opened at 83.39 and moved between the high of 83.38 and the low of 83.47 against the greenback during the session.
The unit finally settled at 83.45 (provisional) against the dollar, registering a loss of 11 paise from its previous closing level.
On Friday, the rupee settled 11 paise higher at 83.34 against the US dollar.
Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said the rupee depreciated on a surge in US treasury yields and rising crude oil prices.
Oil prices were hovering at nearly two-month high levels while the US bond yields above 4 per cent pressurised Asian currencies. However, positive domestic markets and a rise in manufacturing PMI supported the rupee.
Choudhary further said the rupee is lkely to trade with a slight positive bias on gains in domestic markets and expectations of fresh foreign inflows.
"Traders may take cues from ISM manufacturing PMI and construction spending data from the US. USD-INR spot price is expected to trade in a range of Rs 83.10 to Rs 83.70," he added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.24, lower by 0.28 per cent.
Brent crude futures, the global oil benchmark, advanced 0.41 per cent to USD 85.35 per barrel.
In the domestic equity market, The 30-share BSE Sensex climbed 443.46 points, or 0.56 per cent, to close at 79,476.19 points. The broader NSE Nifty settled 131.35 points, or 0.55 per cent, higher at 24,141.95 points.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) increased from 57.5 in May to 58.3 in June, indicating a sharper improvement in business conditions.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth Rs 23.09 crore, according to exchange data.
India's forex reserves jumped by USD 816 million to USD 653.711 billion in the week ended June 21, the RBI said on Friday.
In the previous week, the overall reserves had dropped by USD 2.922 billion to USD 652.895 billion.
The central government's fiscal deficit was 3 per cent of the annual estimates at May-end 2024-25, the first two months of the financial year during which model code of conduct was in place due to Lok Sabha elections.
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