At the Interbank Foreign Exchange (Forex) market, the domestic unit commenced higher at 58.45 a dollar from previous close of 58.52 and immediately touched a high of 58.41.
Later, it met with strong resistance and fell back sharply to a low of 58.93 before settling at 58.71, showing a fall of 19 paise or 0.32 per cent. On Friday, it depreciated by 5 paise. Monday's drop was the biggest since the 31-paise fall on April 23.
Month-end dollar demand from importers, mainly oil refiners, weighed on the rupee value, forex experts say.
The dollar index was down 0.07 per cent against a basket of six major global currencies.
"Rupee was seen approaching the levels of 59.00 today amid weak stock markets which were seen erasing the earlier robust gains posted during the session. Technically, a sustained closing above 58.80 will signal a bullish trend ahead for the USDINR pair," said Abhishek Goenka, Founder & CEO, India Forex Advisors.
Meanwhile, the Indian stock benchmark S&P BSE Sensex, which was up by almost 482 points in early trade, fell on profit-selling and closed higher by a mere 23.53 points or 0.10 per cent. FIIs sold stocks worth Rs 84 crore today as per provisional stock exchange data.
FIIs had picked up shares worth USD 87.99 million last Friday, as per Sebi data.
Pramit Brahmbhatt, Veracity Group CEO, said: "Rupee depreciated for the second consecutive day on month-end dollar demand from oil importers. The trading range for the Spot USD/INR pair is expected to be within 58.25 to 59.25."