Forex traders said, the domestic unit was trading in a narrow range as investors are trading cautiously ahead of the RBI policy decision.
The RBI's Monetary Policy Committee (MPC) is slated to announce its fifth bi-monthly policy decision for this fiscal later in the day.
At the interbank foreign exchange the rupee opened at 71.50, then lost ground and touched a low of 71.55.
The domestic unit was later trading at 71.53 against the dollar at 0941 hrs.
On Wednesday, the rupee had settled for the day at 71.53 against the US dollar.
Traders said muted opening in domestic equities and sustained foreign fund outflows also weighed on the domestic currency.
Meanwhile, domestic bourses opened on a cautious note on Thursday with benchmark indices Sensex trading 28.93 points higher at 40,879.22 and Nifty up 7.15 points at 12,050.35.
The dollar index, which gauges the greenback's strength against a basket of six currencies, fell marginally by 0.10 per cent to 97.55.
Brent crude futures, the global oil benchmark, fell 0.16 per cent to trade at USD 62.90 per barrel.
Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 781.06 crore on Wednesday, according to provisional exchange data.
The 10-year government bond yield was at 6.46 per cent in early trade. DRR DRR