The rupee plunged 13 paise to settle at 71.93 against the US currency on Monday, weighed down by the spike in global crude oil prices as escalating US-Iran tensions fanned fresh fears of conflict in the Middle East.
Forex traders said growing geopolitical tensions could continue to keep the domestic unit under pressure.
At the interbank foreign exchange, the rupee opened weak at 72.03 against the US dollar. During the day, the domestic unit touched a low of 72.11.
The local unit recovered some lost ground and finally closed at 71.93 against the US dollar, lower by 13 paise over its previous closing.
The rupee on Friday had closed at 71.80 against the US dollar.
This is the third straight session of loss for the domestic currency, during which it has lost 71 paise.
Meanwhile, Brent futures, the global oil benchmark, rose 1.49 per cent to $69.62 per barrel.
"The renewed geopolitical worries will remain for couple of days, lending support to oil prices and taking a toll on the emerging market currencies including rupee," said Rahul Gupta, Head of Research- Currency , Emkay Global Financial Services.
US President Donald Trump has warned Iran of "major retaliation" if Tehran carries out any attack against America to avenge the killing of top military commander Qasem Soleimani and hinted at striking its cultural sites.
His statement came hours after Iran announced it will no longer abide by the limits contained in the 2015 landmark nuclear deal.
"Most Asian markets also fell after news of the air strikes. Market participants are awaiting for more clarity on the same but escalation in geopolitical tensions could continue to keep the currency weighed down," said Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services.