The rupee on Tuesday dropped by 14 paise to 61.66 against the dollar in late morning trade on sustained month-end demand for the US currency from importers in spite of persistent foreign capital inflows.
Cautious approach ahead of the Reserve Bank of India's meeting on Tuesday also affected the market sentiment, a forex dealer said.
The rupee resumed lower at USD 61.60 as against the last closing level of 61.52 at the Interbank Foreign Exchange (Forex) market.
It dropped further to 61.69 before quoting at 61.66 per dollar at 1040 hours.
It hovered in a range of 61.60 and 61.69 per dollar in morning deals.
In New York, the dollar traded in tight ranges against most rivals on Monday's as market participants awaited a continuation of the Federal Reserve's monthly bond purchases later this week.
Crude oil prices edged lower in Asian trade today as dealers await a two-day US Federal Reserve policy meeting to find out the bank's plans for its stimulus programme.
Meanwhile, the Indian benchmark BSE-30 share barometer Sensex dropped by 50 points or 0.24 % to 20,520.72 at 1050 hours.