Rupee dives 26 paise to close at 76.68 against US dollar; yields decline to 7.06%

At the interbank foreign exchange market, the rupee opened lower at 76.58 against the American currency and finally settled for the day at 76.68, down 26 paise over its previous close.

During the trading session, the rupee witnessed an intra-day high of 76.55 and a low of 76.77. On Friday, the rupee had closed 25 paise lower at 76.42.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.34 percent higher at 101.56.

Global oil benchmark Brent crude futures fell 4.38 percent to USD 101.98 per barrel.

The 30-share BSE Sensex ended 617.26 points or 1.08 percent lower at 56,579.89, while the broader NSE Nifty fell 218 points or 1.27 percent to 16,953.95.

"The Indian rupee declined on Monday amid risk-off sentiments in global markets. There are increased expectations that US Federal Reserve may hike interest rates by 50 bps in the upcoming FOMC meet next week as indicated by Fed Chair Jerome Powell's speech last week. There are expectations of further aggressive rate hikes in the coming months, too," said Praveen Singh, AVP- Fundamental currencies and Commodities analyst Sharekhan by BNP Paribas.

Significant foreign fund outflows have also dented the domestic currency, while the sharp decline in crude oil prices have cushioned the downside for the rupee.

"We expect Rupee to remain under pressure on deteriorating global risk sentiments due to escalating tensions between Russia and Ukraine, and hawkish US Federal Reserve. Concerns over the resurgence of COVID-19 may also weigh on Rupee. Rupee may trade in the range of Rs 76-77.20 in the next couple of sessions," Singh added.

Foreign institutional investors remained net sellers in the capital market on Friday as they offloaded shares worth Rs 2,461.72 crore, according to stock exchange data.