Rupee nosedived by 61 paise to 67.69 against the US dollar in the opening trade on Monday morning after RBI Governor Raghuram Rajan said no to a second term in the post.
Forex dealers said besides lower opening in the domestic equity market, fresh demand for the American currency from importers also put pressure on the rupee.
They said, however, the dollar's weakness against some currencies overseas, restricted the rupee's losses.
On Friday, rupee had recovered 13 paise to 67.08 against the American unit on account of fresh selling by bankers and exporters and recovery in stock markets.
On Saturday, Rajan said no to a second term in the post, a surprise decision the industry and opposition parties termed as nation's loss.
Meanwhile, the benchmark BSE Sensex dropped 178.03 points or 0.66 per cent to 26,447.88 in early trade today.
The 30-share index declined 178.03 points or 0.66 per cent to 26,447.88 with banking, consumer durables, FMCG, power, healthcare, metal and PSU sectot stocks leading the fall.
However, the index later recovered early losses to trade higher by 70 points around 1000 hrs. It had gained 100.45 points in the previous session on narrowing CAD and positive global cues.
The NSE Nifty opened lower by 62.85 points or 0.76 per cent at 8,107.35. Later it was also trading higher.
Sentiment turned weak following RBI Governor's decision to not seek a second term in the post that dented investor confidence, triggering fresh round of selling by funds.