Losses in the domestic equity markets also weighed on the rupee which was the worst performer among Asian currencies on Monday, analysts said. At the interbank forex market, the local unit opened lower at 74.80 against the greenback and touched a low of 75.05 in day trade.

Weakness in the US dollar and losses in crude oil, however, capped the rupee''s fall and the local unit recovered some of the losses to close at 74.87, registering a fall of 52 paise over its previous close.

On Friday, the rupee had settled at 74.35 a dollar. The dollar index, which gauges the greenback''s strength against a basket of six currencies, fell 0.49 per cent to 91.11. Sriram Iyer, Senior Research Analyst at Reliance Securities, said the rupee depreciated against the dollar as a constant surge in coronavirus infections in the country increased fears of complete localised lockdown in affected areas and stall the economic recovery and prompt FPI outflows.

Delhi Chief Minister Arvind Kejriwal announced a lockdown from 10 pm on Monday night till 5 am next Monday in view of an exponential rise in coronavirus cases and the city''s health system being stretched to its limits. India''s total tally of COVID-19 cases crossed 1.50 crore with a record single-day rise of 2,73,810 new coronavirus infections, while the active cases surpassed the 19-lakh mark, according to the Union Health Ministry data updated on Monday.

Registering a steady increase for the 40th day in a row, the active cases have increased to 19,29,329 comprising 12.81 per cent of the total infections, while the national COVID-19 recovery rate has dropped to 86 per cent.

"Indian rupee erased last Friday’s gain to settle at 74.87 a dollar as the situation got worst with a rise in virus cases. State governments started strict restrictions and the lockdown to control the virus spread. Rupee becomes the worst performer among the Asian currencies following weaker domestic equities," Dilip Parmar, Research Analyst, HDFC Securities, said.

Parmar further said that rising domestic COVID cases are likely to weigh on the rupee, however, any unwarranted volatility will be capped by the RBI’s intervention following weaker dollar index. Meanwhile, Brent crude futures, the global oil benchmark, was trading 0.33 per cent down at USD 66.55 per barrel. On the domestic equity market front, the BSE Sensex ended 882.61 points or 1.81 per cent lower at 47,949.42, while the broader NSE Nifty declined by 258.40 points or 1.77 per cent to 14,359.45.

Foreign institutional investors (FIIs) were net buyers in the capital markets on Friday with the purchase of shares worth Rs 437.51 crore, according to provisional exchange data.