The rupee depreciated 22 paise to 79.46 against the US dollar in early trade on Monday, tracking subdued sentiment in the domestic equities.
However, persistent foreign fund inflows into the capital market restricted the rupee's fall, forex traders said.
At the interbank foreign exchange, the rupee opened weak at 79.50 against the US dollar and then gained some ground to quote at 79.46 in initial deals, registering a decline of 22 paise over the last close.
The rupee rose 16 paise to close at 79.24 against the dollar in the previous session.
In initial deals, the local unit was moving in a tight range of 79.50 and 79.46.
On the domestic equity front, the 30-share Sensex was trading 70.74 points or 0.12 per cent lower at 58,317.19, while the broader NSE Nifty fell 24.30 points or 0.14 per cent to 17,373.20.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, slipped 0.05 per cent to 106.57.
Global oil benchmark Brent crude futures increased by 0.45 per cent to USD 95.35 per barrel.
Foreign institutional investors remained net buyers in the capital market on Friday as they purchased shares worth Rs 1,605.81 crore, as per exchange data.
After turning net buyers last month, foreign investors continued their positive stance on Indian equities and invested over Rs 14,000 crore in the first week of August amid softening of the dollar index.
This was way higher than the net investment of nearly Rs 5,000 crore by Foreign Portfolio Investors (FPIs) in the entire July, data with depositories showed.
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