The rupee fell by 29 paise to 60.32 against the US dollar in early trade on Wednesday on the Interbank Foreign Exchange market due to appreciation of the American currency against other rivals overseas.
Besides, increased demand from importers also put pressure on the domestic unit.
Dealers attributed this fall to dollar's gains against other currencies overseas on reports of US inflation rising in May at its fastest pace in more than a year-and-a-half. However, a higher opening in the domestic stock market restricted the rupee's fall.
The rupee had appreciated by 13 paise to close at Rs 60.03 on Tuesday boosted by late surge in local equities and comments by the RBI that India is better prepared to deal with any fallout from the ongoing Iraq crisis.
Meanwhile, the benchmark BSE Sensex rose by 54.14 points, or 0.21%, at 25,575.33 in early trade on Wednesday.