Besides, heavy capital outflows in anticipation of rate hike by the US Federal Reserve and a strong dollar overseas largely ruled forex market sentiments.
Though the RBI's policy outcome was in line with wider expectations, upside risks emanating from high commodity prices against the backdrop of global headwinds added some pressure on the trading front.
Growing worries over higher government borrowings this fiscal year and apprehensions over fiscal slippages also weighed on trade.
The Reserve Bank in its last meeting for 2017 kept the key interest rate unchanged but raised the inflation forecast for remainder of the current fiscal to 4.3-4.7 per cent.
The central bank also retained its economic growth outlook at 6.7 per cent as announced in the October policy.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,470.56 crore yesterday, as per provisional data.
Global crude prices slipped after a surprise rise in US inventories amid concerns about the outlook for economic growth.
Brent crude, an international benchmark, is trading at USD 62.22 a barrel in early Asian trade.
Meanwhile, domestic equity markets witnessed a big sell-off post RBI's policy outcome as investors expressed disappointment over the apex bank's decision to keep key policy rates unchanged as economic growth gathered pace and inflation quickened to a seven-month high.
The flagship Sensex tumbled over 205 points to end at 32,597.18 and Nifty dropped 74 points to 10,044.10.
The continued selloff in global bourses also dampened trading mood.
The Indian currency opened lower at 64.45 as compared to overnight level of 64.38 at the Interbank Foreign Exchange (forex) market here.
Maintaining its extreme bearish undertone, the local unit dropped to an intra-day low of 64.55 in mid afternoon deals, reacting to RBI policy outcome.
It finally settled the day at 64.52, showing a loss of 14 paise, or 0.22 per cent.
The rupee ended almost flat at 64.38 on Tuesday.
The RBI, meanwhile, fixed the reference rate for the dollar at 64.4467 and for the euro at 76.2791.
On the global front, the US dollar edged broadly lower in a quiet market on Wednesday as concerns about a possible US government shutdown offset optimism about progress on tax reform legislation amid caution ahead of closely watched non-farm payrolls report.
The dollar index, which measures the greenback's value against a basket of six major currencies, was up at 93.39 in early trade.
In cross-currency trades, the rupee advanced against the pound sterling to end at 86.31 from 86.33 per pound and rebounded against the euro to finish at 76.24 from 76.42 yesterday.
The home unit, however, dropped further against the Japanese yen to close at 57.51 per 100 yens as compared to 57.26 earlier.
Elsewhere, the pound sterling remained under pressure for the third day against the US dollar.
In forward market today, premium for dollar continued to rule weak owing to sustained receiving from exporters.
The benchmark six-month premium payable in May moved down to 137-139 paise to 139-141 paise and the far forward October 2018 contract also moved down to 275-277 paise from 278-280 paise yesterday.