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The Indian rupee resumed its decline versus the greenback on bets of larger interest rate hikes from the U.S. Federal Reserve and demand for dollars from importers.

The rupee closed down 0.54% to 79.66 per U.S. dollar, after a short-lived bump on Friday that saw the currency rise following a 50 basis point rate hike from the Reserve Bank of India.

"Rupee through today's session was consistently under pressure. Initially, due to dollar short covering by speculators and later on account of importers," a trader at a Mumbai-based private sector bank said. "There was an overall reluctance to take an added day's risk."

Indian financial markets are shut on Tuesday.

The U.S. economy added more than double the number of jobs economists had forecast in a Reuters poll, data out on Friday showed. The unemployment rate also dropped to its lowest in half a century and average wages rose more than expected.

The report spurred bets that the Fed, which is currently primarily focused on bringing down runaway inflation, will opt for another 75 basis point increase when it meets in September.

"For inflation to come down, growth has to slow and Friday's report was surprisingly strong. Fed will continue to keep hiking rates," Sajal Gupta, head forex and rates at Edelweiss Securities, said. "We will see more outflows from India and other emerging markets."

Treasury yields surged on Friday following the jobs report. Rupee forward premiums, tracking U.S. yields, declined. The 1-year implied yield dropped 10 basis points to 3.01%.