A decline in India's Services PMI also affected the investor sentiment while gains in domestic equity markets capped losses in the local unit, forex traders said.

The rupee ended its six-day gaining streak, closing 2 paise lower at 83.54 against the US dollar on Monday, influenced by a stronger dollar in international markets and higher crude oil prices. A drop in India's Services PMI and gains in domestic equity markets also impacted investor sentiment.

On Monday, the Pakistani rupee depreciated by 3 paisa against the US dollar in interbank trading, closing at Rs 277.86, as reported by the State Bank of Pakistan

The dollar index, which gauges the greenback's strength against a basket of six currencies, was up 0.34 per cent at 101.06.

The rupee continued its rally for the third week, appreciating 6 paise to 83.46 against the US dollar, supported by positive domestic equity markets and foreign fund inflows. However, rising crude oil prices and a stronger dollar limited further gains.