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India's currency slumped one day after the abrupt resignation of the country's central bank governor.

The Indian rupee fell 1.2% against the US dollar and stocks were also lower as investors reacted to his departure.

On Monday, Urjit Patel resigned from his post midway through his three-year term, citing "personal reasons".

His exit comes amid reports of a rift between the Reserve Bank of India (RBI) and the government.

Analysts expected Mr Patel's resignation could make investors more wary of India and hurt the economy as it prepares for a general election next year.

Priyanka Kishore, head of India and Southeast Asia economics at Oxford Economics, said Mr Patel's resignation was a "negative development for the market".

Its timing has also raised some concerns about central bank independence in India.

"Patel's resignation seems like a protest to the government's interference," Ms Kishore said.

"There are already other concerns weighing on the economy... uncertainty about RBI's leadership and policy at this point could weigh on growth further."

Image copyright Reuters Image caption There have been rumours that bank chief Urjit Patel will resign

The rupee has been among the worst performing currencies in Asia this year, hit by various factors including higher oil prices.

The perception of government intervention in monetary policy can undermine investor confidence and hurt the local currency.

A day after Mr Patel's resignation, economist Surjit Bhalla stepped down from Prime Minister Narendra Modi's economic advisory council.

Elections eyed

Uncertainty over the outcome of local elections also weighed on investors.

Indian stock markets were already in the red on Monday after exit polls in state elections showed the ruling party struggling. More election results were due later on Tuesday.

India will vote in a general election in the first half of next year, with polls due by May.