The rupee depreciated by 31 paise to 72.11 in early trade on Monday weighed by the spike in crude oil prices, amid rising concerns over US-Iran tensions.
US President Donald Trump on Sunday vowed "major retaliation" if Iran tries to avenge the killing of its key military commander Qasem Soleimani.
Forex traders said spike in crude oil prices was largely a knee-jerk reaction to the rising tensions between the US and Iran.
At the Interbank Foreign Exchange, the rupee opened on a weak note at 72.03 then fell further to 72.11 against the US dollar, showing a decline of 31 paise over its previous closing.
On Friday, the rupee had settled at 71.80 against the US dollar.
Trump, speaking on Air Force One on his way back to Washington from a vacation in Florida, also said he would impose "very big sanctions" on Iraq if it follows through on a parliament vote calling for the expulsion of US troops based in the country.
The global benchmark, brent crude oil was trading at USD 70.59 per barrel, higher by 2.90 per cent.
Besides, muted opening in domestic equities also dragged the local unit.
Meanwhile, domestic equity market opened on a negative note. The 30-share BSE benchmark Sensex, was trading at 40,986.64, 477.97 down points in early trade. The wide-based Nifty was also trading lower by 142.30 points at 12,084.35.
Foreign funds purchased shares worth Rs 1,263.05 crore from the capital markets on a net basis Friday, provisional data showed.
The dollar index, which gauges the greenback's strength against a basket of six currencies was trading unchanged at 96.84.
The 10-year government bond yield was at 6.55 per cent.