At the Interbank Foreign Exchange Market, the rupee fell by 66 paise to 66.49 a doller in morning trade.
A strong dollar demand from importers and banks, and heavy losses in domestic equity markets weighed on the local currency, forex dealers said.
The rupee dropped even as dollar weakened against other major global currencies overseas amid mounting global economic slowdown worries.
The rupee had lost 29 paise to close at two-year low of 65.83 against the US dollar on Friday on high demand for greenback from banks and importers.
Meanwhile, the benchmark BSE Sensex tanked 1,006.54 points, or 3.67 percent, to 26,359.53 in morning trade