The rupee declined 4 paise to settle at a fresh record low of 85.83 (provisional) against the US dollar on Monday, amid a steep fall in domestic equity markets and unabated outflow of foreign capital.

 Forex traders said the surging US bond yields and concern over HMPV virus outbreak triggered a US dollar chase due to its safe-haven appeal.

 At the interbank foreign exchange, the rupee opened at 85.77 and touched the lowest-ever level of 85.84 against the greenback in intraday trade. The unit finally settled at its record low closing level of 85.83 (provisional), registering a fall of 4 paise from its previous close.

 On Friday, the rupee depreciated 4 paise to close at 85.79 against the dollar.

 Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee touched a fresh record low amid weak tone in the domestic markets and persistent FII outflows, while rising US bond yields and worries over HMPV virus scare also weighed on the rupee.

 "However, a soft US dollar and any further intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels. Traders may take cues from services PMI and factory orders data from the US, Choudhary said and projected the USD-INR spot price "in a range of 85.65 to 86.10".

 Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.33 per cent lower at 108.44.

 Brent crude, the global oil benchmark, fell 0.31 per cent to USD 76.27 per barrel in futures trade.

 In the domestic equity market, the 30-share BSE Sensex crashed 1,258.12 points, or 1.59 per cent, to settle at 77,964.99 points, while the Nifty tanked 388.70 points, or 1.62 per cent, to 23,616.05 points.

 Foreign institutional investors (FIIs) offloaded Rs 4,227.25 crore in the capital markets on a net basis on Friday, according to exchange data.

 The country's forex reserves dropped by USD 4.112 billion to USD 640.279 billion during the week ended December 27, the Reserve Bank said on Friday.