The rupee declined 10 paise to close at 83.48 (provisional) against the US dollar on Monday, as investors remained cautious ahead of the US Federal Reserve's monetary policy decision.

A robust sentiment in the domestic equity market and softening crude prices in the international market, however, cushioned the downfall in the Indian currency, forex traders said.

At the interbank foreign exchange market, the local unit opened weak at 83.39 and touched the intra-day low of 83.51 against the greenback during the session.

The domestic currency finally settled at 83.48 (provisional) against the dollar, registering a loss of 10 paise compared to its previous closing level.

On Friday, the rupee had declined 10 paise to close at 83.38 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.26 per cent to 105.53.

The weakness in the dollar was attributed to investors' cautious approach ahead of the US Federal Reserve's monetary policy and global as well as domestic macroeconomic numbers to be released this week.

The Federal Open Market Committee (FOMC) meeting will begin on Tuesday and the interest rate decision is expected to be announced on May 1.

Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas, said the Indian rupee fell on Monday on positive US dollar in early trades and sustained FII outflows. However, positive domestic equities and softening crude oil prices cushioned the downside.

"We expect the rupee to trade with a slight negative bias on selling pressure from foreign investors and expectations of a recovery in crude oil prices. However, improved global risk sentiments and contained geopolitical tensions in the Middle East may support the rupee at lower levels," Choudhary said, adding, "USD-INR spot price is expected to trade in a range of ₹83.20 to ₹83.70." Brent crude futures, the global oil benchmark, declined 0.53 per cent to $89.03 per barrel.

"Crude oil demand is expected to face challenges from the US due to renewed inflationary fear," said Mohammed Imran, Research Analyst, Sharekhan by BNP Paribas.

On the other hand, he said, the geopolitical risks appear to have eased considerably, removing some of the risk premium priced into the market.

On the domestic equity market front, Sensex jumped 941.12 points, or 1.28 per cent, to settle at 74,671.28, and Nifty soared 223.45 points, or 1.00 per cent, to close at 22,643.40.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹3,408.88 crore, according to exchange data.

Meanwhile, India's forex reserves decreased $2.282 billion to $640.334 billion for the seven days ended April 19--the second consecutive week of drop in the kitty, the Reserve Bank of India (RBI) said on Friday.