The rupee was trading weak at 66.38 against the dollar in the evening session on sustained month-end dollar demand from importers.
Besides, a weak domestic equity market weighed on the domestic currency but the dollar’s weakness against other currencies capped the losses, forex dealers said.
The dollar index, which tracks the greenback against a basket of six rival currencies, was at 95.704, down 0.4 per cent on the day and about 1.7 per cent lower for the month.
But it was well above a seven-month low of 92.621 plumbed a week ago as fears of a sharp economic slowdown in China sent global equities markets plunging.
The dollar slid 0.6 per cent to 121.01 yen, down about 2.3 per cent for August, but well above a seven-month low of 116.15 touched a week ago.
Extending weakness for the second straight day, the rupee declined by 16 paise to 66.30 against the US dollar in early trade. It weakened further to 66.42 before quoting at 66.38 at 3.50 pm local time.
The domestic currency moved in a range of 66.42 and 66.20 in the evening trade.
The rupee had shed 10 paise to close at 66.14 against the US currency in the previous session on Friday.
Meanwhile, the benchmark BSE Sensex ended lower by 109.29 points or 0.41 per cent at 26,283.09.