The rupee weakened by 8 paise to 65.44 against the US dollar in early trade today at the Interbank Foreign Exchange due to appreciation of the American currency overseas.
Dealers attributed the rupee's fall to increased demand for the US currency from importers.
However, a higher opening in the domestic equity market capped the losses.
The rupee had closed yesterday at a fresh 16-month high of 65.36 against the greenback in the face of dollar unwinding from exporters and banks.
Meanwhile, the benchmark Sensex recovered by 56.92 points, or 0.19 per cent, to 29,575.66 in early trade.
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