The rupee fell 22 paise to 79.46 against the US dollar in early trade on Monday, tracking subdued sentiment in domestic equities.
Foreign fund inflows into the capital market restricted the rupee's fall, traders said.
The rupee fell by 22 paise over the last close after opening weak against the US dollar at 79.50 and then gained ground to quote at 79.46 in initial deals.
The rupee rose 16 paise to close at 79.24 against the dollar in the previous session.
The local unit was moving in a tight range between 79.50 and 79.46 in initial deals.
On the domestic equity front, the 30 Sensex was trading 70.74 points or 0.12 per cent lower at 58,317. The NSE Nifty fell 24.30 points or 0.14 per cent to 17,373. The dollar index, which measures the strength of the dollar against a basket of six currencies, fell by 0.05 per cent to 106.57.
The global oil benchmark Brent crude futures increased by 0.45 per cent to USD 95.35 per barrel.
According to the exchange data, 81 crore were reported to have been accounted for.
After turning net buyers last month, foreign investors continued their positive stance on Indian equities and invested more than 14,000 crore in the first week of August amid a softening of the dollar index.
This was higher than the net investment of nearly 5,000 crore by Foreign Portfolio Investors FPIs in the entire July, according to the data with depositories.