The Indian rupee declined sharply against the US dollar on Monday, led by weak Indian equities and strong American currency amid global risk aversion. The rupee depreciated 35 paise to 74.45 versus the US dollar at the day's low.

The forex market was closed on Friday on account of Id-E-Milad. One day prior to Id-Miland, on Thursday the rupee had declined further by 23 paise to close at a two-month low of 74.10 versus the US currency.  As per analyst point of view, losses in Indian stock markets and uncertainty ahead of the US presidential election weighed on the investor sentiment, which caused the rupee to fall.  Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 percent to 94.15.

Forex traders will also be watching the Federal Reserve policy decision later this week.  As per provisional exchange data, Foreign Institutional Investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs. 870.88 crore on a net basis on Friday.

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