The rupee declined by 17 paise to close the day at nearly one-month low of 60.76 against the dollar due to sustained demand for the US currency from importers amid some weakness in local stocks.
"The supply of dollar was also less as FIIs are awaiting election results," said a dealer with a foreign bank.
Persistent capital inflows and a sluggish dollar overseas capped the rupee fall to certain extent, said another dealer.
The dollar index was down by 0.14 pct against its six major global rivals.
At the Interbank Foreign Exchange (Forex) market, the domestic unit fell steeply to a low of 60.89 before recovering some ground to conclude at 60.76, a fall of 17 paise or 0.28 per cent from its previous close.
The last time rupee was at this level was on March 24.
The domestic unit had lost 30 paise yesterday.
"Higher demand for dollar from importers, including oil companies led to rupee's fall. Nationalised banks were seen buying dollars on behalf of corporates," said a dealer with a private sector bank.
There was a rush to buy the greenback as markets have not seen today's level of rupee for some long time, he added.
The BSE benchmark Sensex closed flat after touched historic high high intra-day.
FIIs bought shares worth Rs212.85 crore yesterday, as per provisional data.
Pramit Brahmbhatt, Veracity Group CEO, SAID: "The rupee is trading near the crucial figure 61."
The benchmark six-month premium payable in September slipped to 216-218 paise from 218.5-220.5 paise previously.
Far forward contracts maturing in March, 2015 also dipped to 452-454 paise from 456-458 paise.
The Reserve Bank of India fixed the reference rate for dollar at 60.7147 and for the euro at 83.7695.
The rupee remained weak against the pound to end at 102.22 from last close of 101.80 and also dropped further against the euro to 83.93 from 83.69.
It, however, reacted downwards to 59.25 per 100 Japanese yen from 59.03.