Dealers said besides increased dollar's demand from banks and importers, RBI's decision to keep all key rates unchanged and global rating agency Fitch lowering India's credit outlook to negative mainly put pressure on the domestic unit.
The rupee had lost 53 paise to close at two-week low of Rs 55.93 against the dollar in the previous session after RBI did not deliver the widely expected interest rate cut.
Meanwhile, the BSE benchmark Sensex recovered by 88.13 points, or 0.53 per cent, at 16,793.96 in early trade.