The rupee pared its initial losses, but was still trading down by 29 paise at 67.37 against the American currency in late morning deals after RBI Governor Raghuram Rajan said no to a second term in the post.
Sustained bouts of dollar demand from banks and importers amid bearish US dollar overseas also weighed on the rupee.
WATCH VIDEO | Keystrokes: No Second Term For Raghuram Rajan
The Indian unit opened sharply lower by 57 paise at 67.65 against last Friday’s closing level of 67.08 at the Interbank Foreign Exchange (Forex) market.
The domestic unit hovered in a range of 67.70 and 67.32 during the morning deals before quoting at 67.37 at 1040 hrs.
The dollar index was trading down 0.48 per cent at 93.48 against a basket of six currencies in the early trade.
In overseas trade, oil prices extended gains in Asia on the back of a weaker US dollar and easing fears of UK’s exit from the European Union.
The US dollar fell for the fourth day in a row early today, trading lower against most major currencies, making the dollar-priced commodity cheaper for those using other currencies and pushing up the demand.
Meanwhile, the benchmark Sensex was trading higher by 67.19 points, or 0.25 per cent, to 26,693.10 at 1040 hrs.