Rupee declined 3 paise to hit 83.88 against the US dollar in early trade on Monday amid fluctuating crude oil prices.
Forex traders said volatility in the international dollar trade and limited movement in the Brent crude rates contributed to the decline in the domestic currency in early trade.
The positive domestic equity market, inflow of foreign fund and weak greenback capped the rupee's fall, according to forex traders.
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At the interbank foreign exchange market, the local unit opened 2 paise lower at 83.87 against the American currency and inched up to touch Friday's closing rate of 83.85 before slipping again.
Currency traders are awaiting the PMI manufacturing data set to be released later in the day.
The rupee rose 4 paise on Friday to close at 83.85 against the US currency.
Meanwhile, Sensex and Nifty hit fresh all-time high levels in early trade on Monday. While Sensex rose 164.2 points to 82,527.60, Nifty was up 55.2 points to reach 25,291.10.
The dollar index, which gauges the greenback's strength against a basket of six currencies, remained flat at 101.69 points.
Brent crude, the international benchmark, declined 0.87 per cent to $76.26 per barrel in futures trade.
"Brent oil extended losses on Monday with investors weighing higher OPEC+ production from October against a sharp drop in output from Libya and sluggish demand from China and the US, the world's two biggest oil consumers," Anil Kumar Bhansali Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
Gross GST collections in August grew 10 per cent to about ₹1.75 lakh crore on Sunday, reflecting higher domestic consumption.
India's forex reserves jumped $7.023 billion to touch a new high of $681.688 billion in the week ended August 23, according to the Reserve Bank of India data released on Friday.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Friday, as they purchased shares worth ₹5,318.14 crore, according to exchange data.
Meanwhile, the Centre's fiscal deficit at the end of the first four months of the current fiscal touched 17.2 per cent of the full-year target, according to data released by the Controller General of Accounts (CGA).