The rupee depreciated 8 paise to settle at 83.06 (provisional) against the US dollar on Monday, as strengthening American currency overseas and negative sentiment in the domestic equity markets weighed on the local unit.

However, the downward trend in the global crude oil prices supported the domestic unit and restricted its decline, forex traders said.

At the interbank foreign exchange, the rupee opened at 83.03 against the dollar and traded in the narrow range of 83.00 to 83.07. The local unit finally settled at 83.06 (provisional) against the greenback, down 8 paise over its previous close.

The rupee settled flat at 82.98 against the dollar on Friday.

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Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.33 per cent higher at 104.12.

Analysts said the US dollar gained strength after macroeconomic data showed steady growth in the world's largest economy, while investors were keeping a close watch on the Reserve Bank's monetary policy decision to be announced later this week.

Brent crude futures, the global oil benchmark, declined 0.14 per cent to $77.22 per barrel.

On the domestic equity market front, Sensex fell 354.21 points, or 0.49 per cent, to 71,731.42 points. The Nifty dipped 82.10 points, or 0.38 per cent, to 21,771.70 points.

A monthly survey released on Monday showed India's services sector growth rose to a six-month high in January as new business expanded at a faster pace amid buoyant demand from domestic and external clients.

The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 61.8 in January, up from 59 in December.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday as they purchased shares worth Rs 70.69 crore, according to exchange data.

India's forex reserves increased $591 million to $616.733 billion for the week ended January 26, the Reserve Bank of India (RBI) said on Friday.