The rupee lost 29 paise or 0.43 per cent in three days.
In line with equities, the rupee also extended its losses for the third day on Wednesday by falling 9 paise to 68.07 a dollar on sustained demand for the US currency from banks and importers amid falling crude prices and foreign capital outflows.
Foreign portfolio investors (FPIs) sold shares worth Rs 113.98 crore on Tuesday, as per provisional data released.
The domestic unit resumed lower at 68.18 per dollar as against yesterday's closing level of 67.98 at the Interbank Foreign Exchange (Forex) market and dropped further to 68.26 on initial heavy dollar demand.
However, it trimmed losses and recovered slightly to 68.03 per dollar before ending at 68.07, still showing a loss of 9 paise or 0.13 per cent.
It has lost 29 paise or 0.43 per cent in three days. The domestic currency hovered in a range of 68.03 and 68.26 per dollar during the day.
The dollar index was lower by 0.15 per cent against a basket of six currencies in early trade.
In the global market, the yen strengthened against the dollar and other rivals in Asian trade in the late afternoon today, with a deepening aversion to risk prompting investors to seek the safety of the Japanese currency.
However, the US dollar ended lower yesterday in the global market against its major rivals on sharp slide in crude oil prices, pulling down US debt yields to 9-month lows and dulling the greenback's appeal.
Meanwhile, the benchmark BSE Sensex ended lower by 315.68 points or 1.29 per cent.
Pramit Brahmbhatt, Veracity Financial Services, said, "Taking cues from global equity market, the rupee opened on a negative note as expected, thus strengthening the dollar.
"As the day progressed, the rupee continued to depreciate below the 68-level. Nifty ended with a remarkable loss of 94 points. Thus at the end of the day, the rupee finished with a loss of 9 paise at 68.07 levels, keeping cap of 68.26 mark for the day.
Trading range for spot USD/INR pair is expected to be within 67.8 to 68.5 range.
In forward market, premium for dollar eased on mild receivings from exporters.
The benchmark six-month premium payable in July moved down to 205.75-207.75 from 206-208 paise yesterday while far forward January 2017 contract closed steady at 415-417 paise.
The RBI fixed the reference rate for the dollar at 68.1825 and for the euro at 74,4553.
In cross-currency trades, the rupee dropped further against the pound sterling to end at 98.62 from 97.99 yesterday and the euro also moved down to 74.39 from 74.18.
The domestic unit declined further against the yen to 57.00 from 56.26 per 100 yen.
