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Indian rupee weakened against the US dollar in early trade on Tuesday, tracking sustained foreign fund outflows from the capital market. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday as they offloaded shares worth Rs 750.59 crore, exchange data showed. Besides, concerns over India's widening trade deficit, firm crude oil prices and a rebound in American currency at overseas also adding more pressure on investor sentiment. Data showed that India’s trade deficit widened to $23.76 billion in December. Although, expectations of slower interest rate hikes by the US Federal Reserve capped further fall in rupee.

The partially convertible currency is currently trading at 81.85, weaker by 27 paise from its previous close of 81.58 on Monday. The currency touched a high and low of 81.8975 and 81.74 respectively.