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The rupee fell on Monday, tracking a larger sell-off in risk assets in the wake of the US Federal Reserve's hawkish statements, which signalled a more significant and faster rate hike path.

Indeed, on Monday morning, the dollar index, which gauges the greenback's performance versus six other currencies, was trading at 101.08, just shy of a two-year high of 101.33 set on Friday.

The aggressive posturing by Federal Reserve policymakers for more significant and faster rate hikes to combat runaway inflation has weighed on investor mood, and the ensuing hit to the global economy has weighed on investor morale.

On Monday, Asian stocks sank, Indian shares dipped, and crude oil prices fell more than 2% to below $104 per barrel, owing to demand fears fueled by China's limitations and concerns about economic development.

The rupee followed suit, dropping 23 paise to 76.65 per dollar after opening at 76.58. On Friday, according to PTI. The rupee fell 25 paise to 76.42 per dollar at the close.

While the spike in crude oil prices previously impacted the energy-sensitive currency - a massive spillover from the Russia-Ukraine conflict - the outflow from Indian capital markets has not benefited the rupee recently.

Fears of fast Fed rate hikes have harmed mood, with foreign investors withdrawing over $12 billion from Indian stocks this month.

The BSE Sensex index plummeted over 470 points to 56,711, while the Nifty 50 index dipped to 17,007, both of which were down from the previous week.

Eight of the top ten most valuable companies by market capitalization lost 2,21,555.61 crore last week, in line with the overall market's dismal trend, with Infosys and HDFC Bank taking the greatest hits.