The rupee depreciated 10 paise to 81.69 against the US dollar in early trade on Monday, weighed down by significant foreign fund outflows.
At the interbank foreign exchange, the domestic unit opened weak at 81.69 against the dollar, registering a decline of 10 paise over its last close.
In the previous session on Friday, the rupee settled at 81.59 against the American currency.
Meanwhile, the dollar index fell 0.01 per cent to 101.92.
Brent crude futures, the global oil benchmark, declined 0.17 per cent to $86.51 per barrel.
The focus on the Union Budget and the US Federal Reserve's policy decision will dictate the course for the local unit on Monday, traders said.
"Asian and emerging market peers have started with gains and could aid investor sentiments. However, demand from importers and the Reserve Bank of India's presence could cap gains," said Sriram Iyer, Senior Research Analyst at Reliance Securities.
On the domestic macroeconomic front, India's forex reserves increased by $1.727 billion to $573.727 billion in the week ended January 20, the RBI said on Friday. This is the second consecutive week of rise in the kitty.
In the domestic equity market, BSE Sensex was trading 30.72 points or 0.05 per cent higher at 59,361.62. NSE Nifty advanced 17.55 points or 0.1 per cent to 17,621.90.
Foreign Institutional Investors (FIIs) turned net sellers in the capital markets on Friday as they offloaded shares worth ₹5,977.86 crore, according to exchange data amid a slump in Indian equities due to Adani Group-led selloff on Friday.