Falling for the fourth day in a row, the rupee declined by 25 paise to 56.40 against the dollar in early trade on Thursday on the Interbank Foreign Exchange on stronger dollar against euro and Asian currencies overseas.
Besides, increased demand for the American currency from importers and a weak opening in the local equity market also put pressure on the rupee, traders said.
They added dollar gained against euro in overseas markets on concerns that Spain's troubled banks may need a bigger bailout.
The rupee had ended lower by 19 paise at 56.15 against the dollar on as importers bought dollars in late trade.
Meanwhile, the BSE benchmark Sensex fell by 43.04 points, or 0.25%, at 16,853.59.