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The rupee extended losses to trade at 60.52/53 versus Monday's close of 60.29/30. Traders say dollar selling by corporates, seen earlier in the day, has dried up.
State-run banks are continuing to buy the greenback, likely on behalf of their importer clients.
Dollar scaled to a 14-month high against a basket of currencies after a Federal Reserve study made investors reassess prospects for higher US interest rates.
Index of the dollar against six majors is up 0.2%.
Traders expect resistance for the pair at around 60.55 levels.
Most Asian currencies are trading weaker compared with the dollar.
Traders will continue to monitor foreign fund flows for direction. The Nifty is trading down 0.5%.
