The rupee softened by 29 paise to 68.13 against the dollar in early morning trade on Monday following increased demands for the American currency from importers and banks.
Apart from increased demand from importers, the lower opening of the domestic stock market also put pressure on the rupee.
The losses, however, were capped by the dollar falling to a two-week-low against the yen amid global trade war concerns.
On Friday, the rupee had strengthened by 14 paise to end at 67.84 against the dollar, continuing its rally for the third straight session amid the sustained unwinding of the American currency by exporters.
Meanwhile, the benchmark Sensex plunged by 56.31 points to 35,633.29 in the opening bell.
(With agency inputs)