The rupee declined by 37 paise to close at 85.96 (provisional) against the US dollar on Thursday, weighed down by strong dollar demand from importers and foreign banks, along with a surge in crude oil prices.
According to forex traders, rising US bond yields have unsettled global markets, while the narrowing interest rate differential between India and the US is reducing the appeal of Indian assets.
Additionally, elevated crude prices amid escalating geopolitical tensions in the Middle East further dampened investor sentiment.