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The rupee depreciated 25 paise to 83.07 against the US dollar in early trade on Monday as a negative trend in domestic equities and firm crude oil prices weighed on investor sentiments.
Forex traders said the rupee is trading lower on strong dollar and sustained foreign fund outflows over the past few days.
At the interbank foreign exchange, the domestic unit opened at 83.04, then touched 83.07, registering a decline of 25 paise over its last close.
On Friday, the rupee had settled 16 paise lower at 82.82 against the dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.17 per cent to 103.01.
Brent crude futures, the global oil benchmark, fell 0.89 per cent to $86.04 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 484.37 points or 0.74 per cent lower at 64,838.28. The broader NSE Nifty declined 151.85 points or 0.78 per cent to 19,276.45.
Also read: Index Outlook: Nifty 50, Sensex: More fall on the cards
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday as they offloaded shares worth ₹3,073.28 crore, according to exchange data.
Meanwhile, India's forex reserves dropped for the third consecutive week, declining by $2.417 billion to $601.453 billion as of August 4, the Reserve Bank said on Friday.
In the previous reporting week, the overall reserves had dropped by $3.165 billion to $603.87 billion.
According to the official data released on Friday, India's industrial production growth declined to a three-month low of 3.7 per cent in June mainly due to poor showing by the manufacturing sector.
"On the domestic front, the focus will be on the inflation number and an uptick could weigh on the currency. We expect the USDINR(Spot) to trade sideways and quote in the range of 82.50 and 82.90," said Gaurang Somaiya, forex and bullion analyst, Motilal Oswal Financial services.
"The price action on the D2 (the interbank order matching system) and the names we are hearing on the offer (on USD/INR) suggests that the RBI is intervening," a dealer said.
"It's obviously not a surprise that the RBI is there, but today seemed like the kind of day where it was possible they would relent".
The rupee's Asian peers were all down, pressured by the rise in U.S. yields. The Korean won, the Malaysian ringgit and the Indonesian rupiah were down between 0.6% and 0.8%.
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