The rupee fell 39 paise to 56.04 to the dollar in early trade after the US currency strengthened again overseas currencies.
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Forex dealers said that the rupee also fell on increased demand for dollar from importers along with a weak opening in the domestic equity market.
Meanwhile, Indian stock markets opened flat Thursday weighed down by selling pressure in IT stocks. Both the BSE Sensex and NSE Nifty indices traded 0.12 per cent lower at 11.04 a.m.
The rupee had ended lower by 31 paise at 55.65 against the dollar in the previous session on Tuesday on sustained dollar buying by importers and worries over higher trade deficit in July.
With inputs from Press Trust of India