The rupee dropped by 16 paise to 54.12 against the American currency in the late morning trade on fresh dollar demand from banks and importers on the back of higher dollar in the overseas market.
The rupee resumed steady at 53.96 per dollar but declined immediately to a low of 54.12 at 10:40am at the Interbank Foreign Exchange (Foerx) Market in Mumbai on Monday.
Renewed dollar demand from banks and importers in view of higher dollar in the international market mainly affected the rupee against the dollar, a forex dealer said.
In Los Angeles, the US dollar rose against Japan's currency in the early trade, flirting with the 100-yen level after financial officials from the world's top economies refrained from criticising Japan's weakening of the yen through its monetary-policy programme.
Meanwhile, the Indian benchmark Sensex rose by 58 points, or 0.30%, to 19,074.29 in the late morning trade.