The Indian rupee slipped eight paise to 54.81 against the US dollar in early trade on Tuesday because of higher demand for the US currency from oil importers and banks.

Increased strength of the US dollar against other major currencies in the global market also intensified pressure on the Indian currency.

In early trade today, the euro was hovering above 1.30 to the US dollar; while the US currency was above the 101 mark to the Japan's yen.

Moderate FII inflows and fresh dollar selling by exporters had yesterday helped the rupee close higher by at 54.73 per dollar.

Jayesh Mehta, from Bank of America said he expected some weakness in the domestic currency to continue due to the trade deficit data.

Speaking on the topic, Mehta said, "Some weakness may continue owing to the trade deficit data. In data today, we expect April WPI inflation to be in a 5.5-5.9 percent range. The range for the rupee is seen at 54.70-55/USD."

The Bombay Stock Exchange (BSE) benchmark SENSEX recovered by 0.33 per cent or 66.27 points to reach 19,757.94 in early trade today.