The rupee fell by 5 paise to Rs. 54.34 against the American currency on the Interbank Foreign Exchange in early trade on Tuesday in line with weak local equities.
Dealers said the dollar fell against the yen and euro in Asian trade on Tuesday after weaker-than-expected US manufacturing data sparked renewed fears about the state of the world's biggest economy, weak opening in the stock market also put pressure on the rupee.
The rupee had ended higher by 7 paise at 54.29 against the dollar in the previous session.
Meanwhile, the BSE benchmark Sensex declined by 33.36 points, or 0.17%, at 18,831 in early trade.