The rupee depreciated 3 paise to 83.14 (provisional) against the US dollar on Monday, as rising crude oil prices in international markets and dollar demand from importers dented investor sentiments.
Forex traders said the rupee traded in a narrow range as the support from positive domestic equities was offset by persistent foreign fund outflows.
At the interbank foreign exchange market, the rupee opened at 83.14 against the US dollar. During the day, it witnessed an intraday high of 83.13 and a low of 83.15 against the American currency.
The local unit finally settled at 83.14 (provisional) against the dollar, down by 3 paise from its previous close.
On Thursday, the rupee rose 1 paisa in a range-bound trade to close at 83.11 against the US dollar.
Forex market was closed on Friday on account of Republic Day.
"The Indian rupee traded in a narrow range amid higher crude oil prices as the risk sentiment improved ahead of the Federal Reserve policy decision later this week. The geopolitical uncertainty and Fed stance on rate cuts will decide the direction of forex markets," said Dilip Parmar, Research Analyst, HDFC Securities.
Parmar added that the spot USD/INR is likely to float above 83 before the Fed decision. In the near term, the pair is expected to oscillate between 82.90 to 83.30.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.12 per cent to 103.55.
Brent crude futures, the global oil benchmark, were trading lower by 0.41 per cent to $83.21 per barrel.
On the domestic equity market front, Sensex advanced 1,240.90 points, or 1.76 per cent, to settle at 71,941.57. The Nifty jumped 385.00 points, or 1.8 per cent, to 21,737.60.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday as they offloaded shares worth Rs 2,144.06 crore, according to exchange data.
Meanwhile, India's forex reserves jumped $1.634 billion to $618.937 billion for the week ended January 12, the Reserve Bank of India (RBI) said on Friday.