Forex dealers said besides dollar's gains in the overseas markets on persistent eurozone worries, a weak opening in the stock market also put pressure on the local unit.
However, the Reserve Bank's indication that it may sell dollars directly to oil companies capped the losses.
The rupee had ended higher by 35 paise at 55.65 after plunging to a new intra-day low of Rs 56.38 against the dollar in the previous session.
Meanwhile, the BSE benchmark Sensex declined by 69.50 points, or 0.43 per cent, at 16,152.80 in early trade.
