The rupee extends losses to 55.44/445 versus its previous close of 55.21/22. Traders cite government-driven demand for dollars, which they say could be tipped to defence payments.
Some short-covering from banks also seen in early trade, following the pair's fall to three-week lows in the previous session, dealers add.
Traders expect 55.55 to be the top for the dollar/rupee ahead of the U.S. Federal Reserve's meeting outcome later in the day and domestic inflation due on Friday.
