Extending losses for the second session, the rupee weakened by 16 paise to trade at 68.96 against the US dollar in early trade today on sustained capital outflows amid strengthening of the American currency overseas.
Forex dealers said apart from heavy demand for the US currency from importers, persistent outflows by foreign funds and the dollar's strength against some other currencies overseas, political uncertainty in Germany also weighed on the rupee.
Yesterday, the rupee ended lower by 34 paise to end at a near five-year low of 68.80 against the buoyant US dollar in the midst of weak global trends and concerns on macro-economic front.
Dealers said a higher opening of the equity market capped the fall.
Meanwhile, the benchmark BSE Sensex was trading 79.80 points higher, or 0.22 per cent, at 35,344.21 in the opening trade.