The rupee depreciated by 8 paise to 63.68 against the US dollar in early trade on Wednesday on month-end dollar demand and fresh foreign funds outflows.
However, a weak dollar in global markets as the Federal Reserve kicked off its two-day policy meeting helped the rupee limit its losses, dealers said.
The rupee opened lower by 1 paise at 63.61 against previous close of 63.60. It dropped to a low of 63.68 amid fall in domestic stock exchanges.
Foreign investors pulled out a net Rs 105.56 crore from stocks yesterday.
Meanwhile, the benchmark BSE Sensex was trading lower by 124.28 points or 0.34 per cent at 35,909.45 in early deals as investors turned cautious ahead of the budget.