A weak opening in domestic equities and unabated foreign fund outflows also weighed on the domestic currency.
Mumbai: The Indian rupee opened on a cautious note and fell 11 paise to 71.12 against the US dollar in early trade on Wednesday amid rising demand for the US dollar vis-a-vis other currencies overseas.
Forex traders said weak opening in domestic equities and unabated foreign fund outflows also weighed on the domestic currency.
At the Interbank Foreign Exchange, the rupee opened at 71.10 then fell to 71.12 against the US dollar, showing a decline of 11 paise over its previous closing.
The Indian rupee on Tuesday had closed at 71.01 against the US dollar.
Domestic bourses opened on a negative note on Wednesday with benchmark indices Sensex trading 304.71 points down at 38,792.43 and Nifty lower by 82.05 points at 11,506.15.
Foreign institutional investors (FIIs) offloaded shares worth Rs 828.49 crore on Tuesday, according to provisional exchange data.
The dollar index, which gauges the greenback's strength against a basket of six currencies, rose by 0.19 per cent to 98.52.
Forex traders said easing crude oil prices supported the rupee and restricted the downfall. Crude oil benchmark, Brent Futures, eased 0.74 per cent to USD 71.95 per barrel.
Meanwhile, the 10-year government bond yield was at 6.77 per cent in morning trade.
Meanwhile, on the global front, US President Donald Trump put China on notice at the United Nations on Tuesday over its handling of the Hong Kong crisis.
"The world fully expects that the Chinese government will honour its binding treaty... (and) protect Hong Kong's freedom and legal system and democratic ways of life," he said.