Rupee weakened by 16 paise to 68.23 against the dollar in early trade today, halting its two-day rising streak following month-end demand from importers and banks for the American currency which strengthened overseas.

Forex dealers said, increased demand for the dollar kept pressure on the rupee but a higher a opening in the domestic equity market capped the fall.

The rupee had gained 8 paise to close at 68.07 on Wednesday on selling of dollars by banks and exporters amid lower greenback overseas.  The forex market remained closed yesterday for the Republic Day.

Meanwhile, the benchmark BSE Sensex rallied 147.57 points, or 0.53 per cent, at 27,855.71 in early trade.