After two-day of gaining string, the rupee tumbled by 53 paise to log its all-time closing low of 61.30 against the Greenback following bearish local equities amid fresh dollar demand from importers.
Fresh capital outflows also weighed on the rupee while weak dollar overseas failed to restrict the rupee fall, a dealer said.
Likely reduction in asset purchases later this year by the US Federal Reserve also weighed on the rupee.
The rupee commenced sharply lower at 61.15 a dollar from previous close of 60.77 at the Interbank Foreign Exchange (Forex) market and tried to recover to a high of 60.94 on the back of some recovery in local equities in afternoon deals.
Later, it turned negative and fell back in line with fall in stocks to a low of 61.45 before recovering some ground to settle at 61.30, still showing a steep fall of 53 paise or 0.87 pct. In last two days, it had risen by 33 paise or 0.54 pct.
The Indian benchmark S&P BSE Sensex on Wednesday declined by over 68 points or 0.36 pct after plunging by over 449 points or 2.34 per on Tuesday while FIIs withdrew Rs 350.93 crore on Wednesday as per provisional data with stock exchanges.
The dollar index was down by 0.06 pct against a basket of six major global currencies.