At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced better at 60.10 a dollar from previous close of 60.18.
It was trapped in a narrow range of 60.05 and 60.27 before settling at 60.20, a fall of a mere two paise or 0.03 per cent. On Friday, it fell by 10 paise.
Sustained dollar demand from importers, mainly oil refiners, weighed on the rupee, a forex dealer said.
"Rupee opened on a stronger note today helped by the Asian stocks after the upbeat Chinese PMI data. But soon the gains were trimmed by increased concerns over the widening of the fiscal deficit as oil prices were seen rising further as the violence in Iraq showed no signs of abatement," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
The benchmark S&P BSE Sensex today moved down further by 74.19 points, or 0.30 per cent. FIIs had pulled out Rs 220.65 crore last Friday, as per provisional data with exchanges.
The dollar index was marginally down against its major global rivals.
Meanwhile, global crude oil prices edged higher in Asian today on continued violence in Iraq, but gains were capped as the risk premium associated with the crisis in the key crude producer is already factored in, analysts said.
The premium for forward dollar edged up on payments from banks and corporates.
The benchmark six-month premium payable in November ended slightly better at 224-226 paise from 223-225 paise previously and far-forward contracts maturing in May, 2015 moved up to 471-473 paise from 469-471 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.1927 and for the euro at 81.9065.
The rupee recovered against the pound to 102.45 from last close of 102.52 while fell back to 81.81 per euro from 81.75.
It also declined to 59.14 per 100 Japanese yen from 58.97 previously.