The rupee fell 10 paise to 68.98 against the US dollar in early trade Thursday on increased demand for the greenback from importers and banks.
At the interbank forex market, the rupee opened lower at 69.04 and weakened further to 69.06. However, it recovered partially to quote 10 paise down at 68.98 against the dollar at 0924 hrs.
On Wednesday, the rupee had weakened marginally by 2 paise to close at 68.88 against the US dollar.
Forex dealers said, strengthening of the American currency in overseas market weighed on the domestic currency.
However, sustained foreign fund inflows and higher opening in domestic equities supported the rupee and restricted the fall.
Foreign institutional investors (FIIs) remained net buyers in the capital markets, putting in Rs 1,481.11 crore Wednesday, as per provisional data.
Meanwhile, brent crude futures, the global oil benchmark, fell 0.19 per cent to trade at USD 67.70 per barrel.
Indian bourses rallied in early trade Thursday, with benchmark indices Sensex trading 115.41 points up at 38,248.29 and Nifty at 11,477.60 points, up 32.55 points.
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