The rupee failed to maintain initial gains and slipped 7 paise to 57.08 against the dollar on fresh demand for the American currency from banks and importers.
The dollar gained strength against other currencies as well in the overseas forex markets.
The rupee resumed stronger at 56.90 per dollar as against Monday's closing level of 57.01 at the Interbank Foreign Exchange (Forex) Market on selling of dollars by banks in view of some following some steps taken by the Reserve Bank.
However, it failed to maintain earlier gains and dropped to 57.08 per dollar at 1045 hrs after moving between 56.90 and 57.10 in the morning session.
In New York, the dollar strengthened against the euro and other major currencies.
Meanwhile, the BSE 30-scrip index, Sensex, moved in a narrow range and was trading eight points or 0.05% down at 1100 hrs.