Reuters Market Eye - The rupee is trading at 53.36/37 versus its previous close of 53.30/31, falling sharply from the day's high of 53.07, which was its strongest since October 18.
Traders say gains in the dollar versus most other Asian currencies seen hurting sentiment for the rupee.
Month-end dollar demand from oil firms also adding to the upward pressure on the dollar/rupee.
The BSE Sensex trading down 0.4 percent, boosting the pair further.
Traders, however, expect the upside for the USD/INR to be capped on expectations of more dollar supplies in the near-term as the government looks to dilute its stake in some state-run firms in early February.
(Reporting by Swati Bhat)