The rupee pared initial losses, but was still quoting lower by 2 paise in late morning trade to 68.40 against the American currency on demand from banks and importers amid higher dollar overseas.
The Indian currency opened lower by 10 paise at 68.48 as against Wednesday's level of 68.38 per dollar at the Inter-bank Foreign Exchange (Forex) market.
It hovered in the range of 68.52 to 68.38 per dollar during the morning deals, before quoting at 68.40 at 1015 hrs.
The dollar index were trading down 0.07 per cent at 101.46 against a basket of six currencies.
Overseas, the US dollar was broadly firm at Asian trade, hitting 9 1/2-month highs against the yen as oil prices surged after OPEC agreed to output cuts - lifting inflation expectations and US bond yields.
The dollar's rebound came as oil prices jumped around 9 per cent yesterday as OPEC members agreed to cut production for the first time since 2008.
Meanwhile, the benchmark BSE Sensex were trading up by 31.04 points or 0.12 per cent at 26,683.85 at 1025 hrs.
Meanwhile, domestic bourses witnessed a spectacular
rebound to hit a 6-month high on across-the-board buying spree after stronger-than-expected quarterly economic growth lifted market sentiment amid highly bullish global sentiments.
The benchmark Sensex zoomed over 241 points to end at 28,984.49, while broader Nifty shot up 66.20 points to close at 8,945.80.
In the forward market, premium for dollar displayed weak to steady trend in the absence of any market moving factors.
The benchmark six-month premium for August softened to 161-163.50 paise from 162-164 paise, while the far-forward February 2018 contract held steady at 316-319 paise.
On global commodity front, crude prices continued to rally underpinned by OPEC's production cuts, though stronger dollar and rising U.S. Shale oil output trimmed gains.