The spot rupee, which traded at 153.60 per dollar earlier in the session, closed at 153.55/60, compared with Friday's close of 153.45/55.

Dealers said they expect the rupee to weaken by around 4-4.5 percent during the year.

The rupee has slipped 2.6 percent so far in the year.

The currency came under pressure early this month due to dollar demand from state-run Ceylon Petroleum Corp (CPC), which stocked up crude oil ahead of an expected fuel price hike, dealers said.

The currency is expected to weaken on generally higher importer demand ahead of the national budget next month, dealers said.

The island nation has seen 19.8 billion rupees ($128.95 million) of net inflows into equities this year as of Monday's close, and 41.1 billion rupees into government securities as of Oct. 25, official data showed.