The rupee opens at 1-week low as high crude oil prices continue to weigh on sentiment. Pair at 55.52/54 after rising to 55.59, versus 55.34/35 last close.
Foreign bank dealer says market was short overnight and panicked to cover at open.
Brent crude prices rose on Monday in choppy trade, hitting a three-month peak on concerns about North Sea supply and Middle East tensions, while fears about a slowing global economy checked gains.
Reserve Bank of India Governor Duvvuri Subbarao reiterated his concern about inflation on Monday, saying it remained above the central bank's comfort level, and called monetary policy the first line of defence even when inflation was coming from supply shocks.
Credit Agricole in a note said Subbarao's comments may weigh on INR and Sensex.