Forex dealers said besides dollar's gains against euro and other currencies in the overseas markets, increased dollar demand from importers and some banks also put pressure on the domestic currency.
They, however, said a higher opening in the stock market capped the rupee's losses.
The BSE benchmark Sensex recovered by 65.74 points, or 0.35 per cent, to 18,395.06 in early trade today.
Yesterday, the rupee had lost 4 paise to close at 55.10 amid fresh dollar demand.