Forex dealers, however, said that continued foreign flows capped rupee's fall to some extent.
The local unit commenced strong at 53.02 from Friday's close of 53.19 against the dollar at the Interbank Foreign Exchange (Forex) market.
However, fag-end dollar demand pulled it down to 53.32 before settling at 53.28, a fall of nine paise, or 1.34 per cent. The rupee moved in a range of 52.91-53.32.
"The rupee was seen trading in the range of 41 paise. It was initially gaining against the US dollar but started depreciating taking cues from the weak euro. The rupee was also down as the dollar index recovered from its 3 month low and is now trading near 79.50 levels.
"The negative stock markets further put pressure on the rupee," said Abhishek Goenka, Founder and CEO, India Forex Advisors.
Foreign institutional investors pumped in nearly USD 161 million (Rs 856.94 crore) in local equities today, according to the BSE provisional data.
The dollar index was up by almost 0.30 per cent against the basket of six major global currencies.
Meanwhile, the BSE benchmark Sensex lost 30 points to end at 19,751.19.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said: "The rupee reversed the initial gains of first half of session on dollar demand and political uncertainty after the Samajwadi party proposed for an early general election in September. A firmer tone of dollar index also added to rupee's woes".(MORE)
