The rupee depreciated 2 paise to 82.77 against the US dollar in early trade on Monday weighed down by foreign capital outflows and a rise in crude oil prices in the international market.
However, a weak greenback against major rivals overseas cushioned the downside for the local unit, forex dealers said.
At the interbank foreign exchange, the domestic unit opened weak at 82.80 against the dollar, then gained some ground to quote 82.77, registering a decline of just 2 paise over its previous close.
In the previous session on Friday, the rupee settled almost flat at 82.75 against the US dollar.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.15 per cent to 104.54.
Brent crude futures, the global oil benchmark, advanced 1.20 per cent to USD 79.99 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 67.61 points or 0.11 per cent higher at 61,405.42. The broader NSE Nifty rose 14.65 points or 0.08 per cent to 18,283.65.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday as they offloaded shares worth Rs 1,975.44 crore, according to exchange data.
After investing over Rs 36,200 crore last month, foreign investors continued their positive momentum and have injected a net Rs 10,555 crore in Indian equities so far in December amid stabilisation in oil prices and moderating US inflation.
Going forward, FPI flows are expected to be volatile amid equity markets worldwide witnessing an increase in volatility as global central banks reiterate their intent to keep policy rates high for an extended period to curb elevated inflation in their respective economies, said Shrikant Chouhan, head of equity research, (retail), Kotak Securities Ltd.