Mumbai, Nov 3 (PTI) The rupee extended its descent for the third straight day and settled five paise down at 88.75 (provisional) against the US dollar on Monday, near its all-time low level, weighed down by a strong American currency and foreign fund outflows.

Forex traders said domestic equities ended on a positive note and supported the domestic unit at lower levels.

At the interbank foreign exchange, the rupee opened at 88.73 and touched an intraday low of 88.80 against the greenback. The unit ended the session at 88.75 (provisional) against the dollar, logging a loss of 5 paise from its previous closing level.

The rupee had ended one paisa lower at 88.70 against the dollar on Friday, a day after crashing 47 paise on Thursday, following the hawkish commentary by US Federal Reserve chair Jerome Powell, even as the Fed reduced the interest rate by 25 basis points.

The domestic currency has recorded its lowest-ever closing level of 88.81 against the dollar on October 14.

Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan, said the Indian rupee declined to near its all-time low amid a strong US dollar and broad strength in crude oil prices. However, positive domestic equities cushioned the downside.

"We expect the rupee to trade with a slight negative bias on strengthening in the US dollar and dollar demand from importers to hedge their open positions," he said, adding that any intervention by the Reserve Bank of India (RBI) may also support the rupee.

"USD-INR spot price is expected to trade in a range of 88.50 to 89.10," he said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.13 per cent to 99.75.

Brent crude, the global oil benchmark, fell 0.02 per cent to USD 64.76 per barrel in futures trading.

On the domestic equity markets front, the Sensex rose 39.78 points or 0.05 per cent to settle at 83,978.49, while the Nifty gained 41.25 points or 0.16 per cent to end at 25,763.35.

Foreign institutional investors sold equities worth Rs 6,769.34 crore on Friday, according to exchange data.

A monthly survey released on Monday showed India's manufacturing sector activity strengthened in October, buoyed by Goods and Services Tax relief, productivity gains and tech investment, even as international sales rose at a weaker pace.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) rose from 57.7 in September to 59.2 in October, indicating a quicker improvement in the sector's health.

Meanwhile, India's forex reserves dropped by USD 6.925 billion to USD 695.355 billion during the week ended October 24, the RBI said on Friday. In the previous reporting week, the overall reserves had increased by USD 4.496 billion to USD 702.28 billion. PTI HVA DRR