The rupee depreciated 5 paise to 83.26 against the US dollar in the morning session on Tuesday, tracking a strong American currency overseas and sustained foreign fund outflows.
Forex traders said a negative trend in domestic equities also weighed on the local unit.
At the interbank foreign exchange, the rupee opened at 83.23, then touched 83.26 against the American currency, registering a decline of 5 paise over its previous close.
On Monday, the rupee had settled at 83.21 against the US dollar.
Forex traders said the rupee is expected to witness range-bound trade as investors resorted to dollar buying on account of demand from FPIs, oil and external commercial borrowing (ECB) redemptions.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.14 per cent higher at 105.36.
Brent crude futures, the global oil benchmark, fell 0.50 per cent to $84.75 per barrel.
"Today, focus will be on the trade balance number from the US and China. At the same, market participants will be awaiting cues from statements of a couple of Fed members.
"Any hawkish comments are likely to extend gains for the dollar. We expect the USDINR (spot) to trade in the range of 83.05 and 83.40," Gaurang Somaiya, forex and bullion analyst at Motilal Oswal Financial Services, said.
In the domestic equity market, the 30-share BSE Sensex was trading 191.53 points or 0.29 per cent lower at 64,767.16. The broader NSE Nifty declined 45.40 points or 0.23 per cent to 19,366.35.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday as they sold shares worth Rs 549.37 crore, according to exchange data.