The rupee pared initial losses, but was still quoting lower by 2 paise to 65.38 against the American currency on bouts of dollar demand from banks and importers.
The Indian rupee resumed lower by 4 paise at 65.40 per dollar as against Monday's closing level of 65.36 at the Interbank Foreign Exchange (Forex) Market here today.
The rupee fell further at 65.4450 before quoting at 65.38 per dollar at 1030 hours.
The domestic currency hovered in a range of 65.4450 and 65.3750 per dollar during morning deals.
Meanwhile, the dollar index was trading lower by 0.10 per cent at 100.26 against a basket of six currencies in late morning trade.
Overseas, the dollar was on the defensive in Asian trading early today, after Chicago Federal Reserve President Charles Evans reinforced the perception that the US central bank won't accelerate the pace of its interest rate hikes.
Meanwhile, the benchmark Sensex was trading lower by 22.79 points or 0.08 per cent to 29,495.95 at 1030 hrs.