The rupee declined by 12 paise to 53.94 against the dollar at the Interbank Foreign Exchange market in early trade on Thursday on fresh demand for the American currency from banks.
Forex dealers said fresh demand for the US dollar from banks mainly put pressure on the rupee
but a higher opening in the equity market restricted the loss.
The rupee had edged up by just three paise to close at 53.82 against the US dollar amid mild dollar selling by exporters in Wednesday's trade.
Meanwhile, the BSE benchmark index Sensex rose further by 19.71 points, or 0.10%, to 19,627.79 in early trade on Thursday.