After a brief recovery, the rupee once again turned weaker against the US dollar by depreciating 11 paise to end at 67.87 on fresh dollar demand from importers and banks.
Heavy capital outflows alongside near-term consequences of the Federal Reserve rate hike largely kept sentiment shaky despite a dollar retreat.
The US central bank raised interest rates by a quarter point and signalled that hikes could come next year at a faster pace than some expected.
However, a steady stream of dollars from export receivables and overseas remittances continued to give the rupee some support, a forex dealer commented.
In an extremely quiet and range-bound trade at the Interbank Foreign Exchange market, the domestic currency resumed a tad lower at 67.78 from last Friday's closing level of 67.76.
It immediately staged a rebound following adequate supplies of greenback and touched an intra-day high of 67.71 in late afternoon deals.
However, the recovery momentum seems to be short-lived as the local unit turned weak and fell back to 67.88 before ending at 67.87, showing a loss of 11 paise, or 0.16 per cent.
The rupee had gained 7 paise on Friday largely overcoming the pressure created by US Fed's rate hike.
In worldwide trade, the US dollar retreated from its recent multi-year highs to trade subdued against major rival currencies on the back of sluggish US property data which failed to meet expectations, triggering some downward pressure.
The US dollar index was quoted marginally higher at 102.95 in late afternoon trade.
Meanwhile, the RBI today fixed the reference rate for the dollar at 67.7262 and euro at 70.8416.
In cross-currency trades, the rupee fell back a tad lower against the pound sterling to settle at 84.32 from 84.31 and also drifted further against the euro to finish at 70.84 as compared to weekend level of 70.78.
The home unit continued to lose ground against the Japanese yen to close at 57.89 from 57.34 per 100 yens previously.
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