At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 59.80, which was also the day's high, from last Friday's close of 59.72 and declined further to a low of 60.04 before concluding at 60.01, showing a fall of 29 paise or 0.49 per cent.

Local players mostly stayed on the sidelines amid a lack of fresh trading cues from overseas due to closure of US markets, a bullion trader said.

Continued dollar selling by exporters also aided the rupee's upward journey for the second session in a row even as the dollar index was trading up 0.14 per cent against a basket of six major global currencies. Overseas funds pumped in over Rs 1,465 crore in Indian equities on Monday, helping benchmark indices hit fresh highs.

Early rally in domestic stocks amid increased capital inflows helped the rupee to resumed higher at 61.02 from last Friday's close of 61.19 and improved further a high of 60.88 in morning deals. It, later, fell back on late sell-off in share markets and dropped to a low of 61.22 before concluding at last weekend's close of 61.19.

Firm dollar overseas also weighed on the rupee while continued capital inflows could not able to stem the rupee fall, a forex dealer said. Escalating tensions between Russia and Ukraine also weighed on the emerging markets, including India.

Heavy buying in banking, capital goods and IT bluechips helped the Sensex rebound over 164 points on Friday amid a strong show in global markets. Axis Bank, L&T, ITC and Tata Steel led the 21 Sensex gainers. Bharti Airtel was the biggest among nine laggards.

In line with equity market, the rupee surrendered initial gains, but was still quoted higher by two paise to 62.35 per dollar in late morning deals on selling of the American currency by banks and exporters.

Sustained dollar demand from importers, mainly oil refiners, to meet their month-end requirements amid fresh capital outflows also weighed on the rupee, a forex dealer said.

The rupee was also supported by weakness in the dollar overseas after disappointing US jobs data announced last weekend eased concerns about the Federal Reserve's tapering of the stimulus programme, a forex dealer said.

The 30-share index fell for the fifth straight session, with bouts of profit-selling pulled it down to 20,570.28. This is the lowest closing value for the Sensex since October 17 (20,415.51).

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The sentiment was so strong that a firm dollar overseas against a basket of six major currencies failed to stem the rupee's rise. The dollar index was up by 0.16 per cent.

Gold price slipped below Rs 26,000 in futures trade, as speculators trimmed their positions, taking negative cues from overseas markets.

Oil slipped towards $105 a barrel on Thursday after Egypt's army ousted its president, helping to ease concerns over the threat of supply disruption in the Middle East.

Asian shares recovered from their lowest in about six months on Tuesday as weak new U.S. manufacturing data eased worries about the Federal Reserve's stimulus programme, although investors were cautious before a more important jobs report later in the week.

The Indian rupee slumped by 26 paise to hit a new 11-month low of 56.76 on fag-end dollar buying and capital outflows from local equities.

Besides, strengthening of euro against the dollar in overseas market and a higher opening in the equity market supported the rupee, forex dealers said.

Snapping a four session gaining streak, the Indian rupee on Monday lost nine paise to 53.28 against the US dollar due to renewed dollar demand and firm global cues, amid weak local equities.

Falling for the fifth day in a row, the rupee on Monday lost 22 paise to end at 55.73 against the US dollar due to sustained demand for the American currency from importers and banks.

In lacklustre trading, the Indian rupee on Monday depreciated for the second trading session in a row by 20 paise to close at 53.01 against the Greenback on sustained dollar demand from importers amid rise in Wholesale Price Index.