The rupee pared its early sharp losses to trade down by 2 paise to 64.08 against the US currency in late morning on continued bouts of dollar demand from importers and banks amid weak local equities.
The rupee opened sharply lower at 64.20 per dollar as against last Friday's closing level of 64.06 at the inter-bank foreign exchange here.
It dropped further to 64.2450 taking cues from weak domestic equities, before regaining most of the lost ground to trade 64.08 at 1040 hrs.
The Indian unit hovered between 64.2450 and 64.08 during morning trade.
"A strong dollar overseas amid strong US job data amid speculation of interest rate hike next month also hovered the rupee sentiment," a dealer said.
The US dollar steadied against its major rivals in early Asian trade after rallying on upbeat US jobs data, which sent bond yields surging on the prospects of increasing inflation and hammered equities.
The 30-share BSE Sensex fell by 334.30 points or 0.95 per cent at 34,732.45 at 1100 hrs.
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