According to forex dealers, besides strong demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices and capital outflows, weighed on the domestic currency.

The dollar's strength against its rival currencies overseas amid fears of a possible escalation in the US-China trade conflict too put pressure on the rupee.

However, the Reserve Bank of India wasn't seen actively intervening in the foreign exchange markets as it did on Friday, traders said, according to Reuters.

"This depreciation is also in line with emerging market exchange rates which was largely fed in through dollar strength... other factors leading to INR weakening include continuing global trade disputes. Separately, monetary policy announcements by the Fed may have further led to investment re-routing with a derived pressure on INR valuation," said Anis Chakravarty, Lead Economist and Partner, Deloitte India.

"US non-farm payroll data came at better than expected. Hence markets expect two more interest rate hike by the Fed, one in September and another one in December. The RBI is nearly non existent hence there is speculative buying in the market. Focus will now shift to India IIP (Index of Industrial Production) and CPI (Consumer Price Index)", told Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers to NDTV.

The 10-year bond yield rose to its highest level since late-2014 as worries of higher crude prices and weakening rupee bolstered inflation concerns. The 10-year benchmark bond yield rose to 8.12 per cent, its highest since November 28, 2014. The 10-year paper ended at 8.03 per cent on Friday.

On Friday, the rupee rose 26 points to close at 71.76 against the dollar. The rise in the rupee's value against the greenback came after seven days of depreciation. The Reserve Bank of India (RBI) intervened heavily in the foreign exchange market on Friday, mounting a formidable defence of the 72 rupee to the dollar mark, said a Reuters report.

Meanwhile, benchmark equity indices started the week in the red on Monday amid negative Asian cues. At 12:29 pm, the S&P BSE Sensex dropped 369.53 points or 0.96 per cent to trade at 38,020.29. The broader Nifty50 was trading at 11,471.80, down 117.30 points or 1.01 per cent.

Asian shares also started the week in the red, faltering for the eighth straight day while the dollar climbed as US President Donald Trump raised the stakes in the heated trade dispute with China.