The rupee declined by 12 paise to Rs 49.31 per dollar on the Interbank Foreign Exchange in early trade on Tuesday amid weak equity markets.
Traders said dollar's gains against the euro after rating agency Moody's cut the debt ratings and outlooks of several European countries and a weak opening in the domestic equity markets mainly put pressure on the rupee.
Meanwhile, the BSE benchmark Sensex was down by 22.97 points, or 0.13 per cent, at 17,749.87 in opening trade.
The rupee had gained 23 paise to close at Rs 49.19/20 per dollar on Monday.