The partially-convertible rupee ended at 74.87/88 per dollar, compared with its close of 74.56 on Friday. The currency fell 0.4% on the day, its biggest single-day fall since June 17.
"The bias of risk appetite is gradually turning towards risk-off as markets evaluate the impact of a resurgence in COVID-19 cases worldwide against a backdrop of escalating inflation environment and emergence of U.S.-China tensions," said Upasna Bharadwaj, economist at Kotak Mahindra Bank.
Stock markets and currencies in Asia saw heavy losses as some countries in the region tightened curbs to tackle a highly contagious Delta variant-fuelled surge of infections that sparked a sell-off in risky assets. [EMRG/FRX]
India reported 38,164 new infections in the last 24 hours, data from health ministry showed, with deaths rising by 499 -- the lowest in more than three months. The country's broader NSE share index and the main BSE share index both dropped 1.1% each.
The dollar gained broadly as investors expressed renewed scepticism over the potential for a strong economic rebound from the pandemic.
Looking ahead, traders now broadly expect the rupee to trade in a range of 74.40-75.40 over the week.
(Reporting by Swati Bhat; editing by Uttaresh.V)