The rupee declined by 6 paise to Rs 55.01 against the US dollar in early trade on Wednesday at the Interbank Foreign Exchange market on strengthening of the American currency overseas.
Forex dealers said besides dollar's gains against yen and other currencies in the overseas markets, approaching month and year-end demand for the American currency also put pressure on the domestic currency, but a higher opening in the equity market capped the losses.
The BSE benchmark Sensex rose by 66.32 points, or 0.34%, to 19,321.41 in early trade.
The rupee had gained 11 paise to close at 54.95 against the US dollar on Monday on fresh selling of the dollar by exporters amid sustained capital inflows. Forex and Money markets remained closed yesterday on account of 'Christmas' holiday.