MUMBAI: The Indian rupee closed weaker on Monday as broad based interbank dollar demand pressured the currency even as the greenback weakened.

The rupee ended at 83.4375 against the US dollar, lower than the close of 83.3825 in the previous session.

The dollar index was down 0.1% at 105.6 and most Asian currencies ticked up, with the Indonesian rupiah up 0.3% and leading gains.

Interbank dollar bids had pushed the rupee to an intra-day low of 83.4650 earlier in the session but a decline in the dollar index helped it trim losses, traders said.

“The market is largely driven by flows at this point ... without which, the rupee should see sideways price action in a 5-10 paisa intraday range,” a foreign exchange trader at a private bank said.

The rupee had gained last week aided by portfolio inflows, including into the country’s sovereign bonds on account of their inclusion in the JPMorgan emerging market debt index.

Meanwhile, US bond yields nudged higher as higher odds of a second term for former US President Donald Trump outweighed rate cut optimism spurred by a flat May PCE inflation reading released on Friday.

Investors are currently pricing in nearly two rate cuts by the Federal Reserve over 2024.

“The rupee can limit its downside and maintain stability in the face of external challenges,” Amit Pabari, managing director at FX advisory firm CR Forex said. The currency is gradually expected to move towards 83.10, Pabari said.

Investors now await the release of US ISM manufacturing PMI later in the day.

The US labour market report scheduled for Friday is the key focus for this week and is expected to show that the US economy added 195,000 jobs in May, down from 272,000 in the previous month, according to a Reuters poll.