The rupee reacted sharply downwards by 29 paise to close at 62.04 against the Greenback following negative local equities amid fresh dollar demand from importers.
Firm dollar overseas also weighed on the rupee while continued capital inflows could not able to stem the rupee fall, a forex dealer said.
Escalating tensions between Russia and Ukraine also weighed on the emerging markets, including India.
At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced lower at 61.95 a dollar from last Friday's close of 61.75 but tried to recover on initial dollar selling by exporters to a high of 61.83.
However, it fell back on fresh dollar demand from importers and fall in local stocks to a low of 62.09 before settling at 62.04, showing a loss of 29 paise or 0.47 per cent.
Last Friday, it had gained 23 paise or 0.37 per cent.
The Indian benchmark S&P BSE Sensex plunged by 173.47 points or 0.82 per cent, snapping five session of gaining string while FIIs picked up shares worth $97.92 mln last Friday, as per Sebi data.
The dollar index was up by 0.10 pct against a basket of six major global rivals.
Mr. Pramit Brahmbhatt, CEO, Alpari Financial Services, (India) said,"Today Rupee depreciated almost 0.4 pct, taking cues from weak local equity which closed down by over 0.8 per cent. Also the fears of military tensions between Russia and Ukraine are spreading negative sentiments over emerging markets which is dragging them down. The trading range for the rupee is expected to be within 61.50 to 62.50."
"Rupee was seen weakening today against the US dollar. Initial weakness was mainly attributed to the downbeat figures of GDP and fiscal deficit which were released on Friday.
Negative domestic stock markets were also seen putting slight pressure on the rupee. Technically, rupee continues to hold well below the strong resistance level of 61.80," said Mr. Abhishek Goenka, Founder and CEO, India Forex Advisors.
Meanwhile, forward dollar premium recovered on fresh payments from banks and corporates.
The benchmark six-month premium payable in August rose to 259.5-261.5 paise from 257-259 paise last weekend.
Far forward contracts maturing in February also improved to 509-511 paise from 504.5-506.5 paise.
The RBI fixed the reference rate for dollar at 61.8605 and for the euro at 85.3085.
The rupee fell back against the pound to 103.78 from last close of 103.11, while declined further to 85.47 per euro from 85.15. It also remained weak to end at 61.27 per 100 Japanese yen from 60.60.
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