Falling for the second day, the rupee depreciated by 14 paise to close at over one-week low of 63.60 against the Greenback on steady dollar demand from state-owned banks and importers.
A massive rout in financial markets and commodites worldwide jolted by Chinese stock bubble burst also weighed on the local currency, a forex dealer said.
However, the greenback's weakness trend against other Asian currencies limited the rupee slide.
In overseas trade, the dollar retreated from its one-month high, pressured by stronger yen as well as fresh hopes for a solution to Greece's debt crisis.
The domestic currency opened substantially lower at 63.55 per dollar compared to overnight closing level of 63.46 per dollar at the Interbank Foreign Exchange (FOREX) market on heavy dollar demand from banks and importers amid sharp fall in the domestic equity market.
It drifted further to hit a fresh intra-day low of 63.6450 before ending at 63.60, showing a fall of 14 paise, or 0.22 per cent - the level not seen since June 24, this year.
The local currency touched a high of 63.5250 during the trade.
The BSE-sensex nosedived by a whopping 483.97 points, or 1.72 per cent, to settle at 27,687.72.
The US dollar index was down by 0.12 per cent at 96.77.
Meanwhile, oil bounced back from a three-month low to around $57 a barrel on Wednesday after an industry report showed a larger-than-forecast drop in US crude stocks and also Iran nuclear talks failed to produce a deal.
In the forward market, the premium for dollar ended marginally higher on mild buying pressure from corporates.
The benchmark six-month premium payable in December held steady at 215-217 paise, while June, 2016 contract, it edged up to 436-438 paise from 435-437 paise on Tuesday.
The RBI fixed the reference rate for the dollar at 63.5690 and for the euro at 69.9323.
The rupee firmed up further against the pound sterling to 97.73 from 98.08.
However, the domestic unit fell back to 70.01 per euro against 69.57 and slumped further against the Japanese currency to 52.27 per 100 yen as compared to 51.84 on Tuesday.
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