The rupee pared its initial gains and settled 2 paise lower at 79.80 (provisional) against the U.S. dollar on Monday, weighed down by the strength of the greenback in the overseas market.
At the interbank forex market, the local unit opened at 79.70 against the greenback. It witnessed an intra-day high of 79.59 and a low of 79.80 during the session.
It finally ended at 79.80, down 2 paise from its previous close of 79.78.
The dollar index, which measures the greenback's strength against a basket of six currencies, rose 0.26% to 110.05.
Brent crude futures, the global oil benchmark, declined 1.52% to $89.96 per barrel.
"King Dollar has been on a rampage against the Chinese yuan and further weakening of the yuan will be a dangerous sign for risk markets and Asian currencies," said Dilip Parmar, Research Analyst, HDFC Securities.
Along with the weak regional currencies, the rupee depreciated against the U.S. dollar for the fourth day in a row. However, the momentum remained lacklustre in the rupee as the economy is better placed among Asian countries.
On the overseas front, risk assets extended their decline and the dollar rallied against major trading partners ahead of a busy week for global central banks, Parmar said, adding that in the near-term, spot USD-INR is expected to trade in the range of 79.05 to 79.90.
On the domestic equity market front, the BSE Sensex ended 300.44 points or 0.51% higher at 59,141.23, while the broader NSE Nifty gained 91.40 points or 0.52% to 17,622.25.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets, as they offloaded shares worth ₹3,260.05 crore on Friday, according to exchange data.
