The fall comes a day after it hit its highest gain in eight years.
Investors remained cautious in the face of the expiry of November series contracts in the derivatives segment, which also dampened sentiment.
The rupee on Monday continued its upward march against the US dollar for the third day, firming up by another 10 paise to 66.00 on fag-end selling of the American currency by banks and exporters.
If the greenbacks don't pour in, our markets can't do the Indian rope trick. That has been very evident last week and all of November. The FIIs have just sold stocks worth close to a billion dollars and our markets have taken a 10 per cent or 2,050 point correction.
Rupee is likely to remain under pressure due to domestic concerns.
The rupee had gained two paise to close at one-month high of 62.14 against the dollar in Tuesday's trade.
Extending losses for the second straight session, the rupee slipped by 11 paise at 66.54 against the US dollar.
India's foreign exchange reserves rose by $2.8 billion to $343.2 billion
The partially convertible rupee closed at 60.30/31 per dollar compared with 60.28/29 on Friday.
Weakness in other currencies against the dollar overseas, after US Fed indicating interest rates could rise earlier than expected as the jobs market picking up, also put pressure on the local unit, forex dealers said.
The domestic currency has tumbled by 104 paise, or 1.63 per cent, in last six trading days.
Dealers attributed the fall to the dollar's gains after China devalued yuan, which pushed up demand from importers for the US currency.
Most Asian currency and equity markets too suffered steep losses due to US rate hike fears.
The RBI also asked the oil marketing companies to smoothen their daily dollar demand so that upcoming bunched up demand was covered in advance in forward markets or on days with low dollar demand.
The RBI also asked the oil marketing companies to smoothen their daily dollar demand so that upcoming bunched up demand was covered in advance in forward markets or on days with low dollar demand.
Increased demand for the dollar weighed on the local currency.
The 30-share Sensex ended down 90 points at 19,429 after hitting an intra-day low of 19,398 and the 50-share Nifty ended down 40 points at 5,881 after touching an intra-day low of 5,871.
The domestic currency had last ended at 64.17 per dollar.
There is high demand for the US currency from importers
The rupee had snapped its 3-day losing streak on Thursday.
The rupee recovered from initial losses against the American currency and was quoted higher by 6 paise to 62.00 on fresh selling of dollars by banks and exporters in view of strong foreign capital inflows into equity market.
Rupee hits more than two-year low; RBI intervenes
The rupee on Wednesday strengthened by another 3 paise to 62.82 against the US dollar.
The rupee on Friday snapped its two-day gaining streak against the US dollar.
The rupee rallied for the second straight session by gaining 21 paise to end at 66.10 against US dollar.
The rupee snapped 2-day rise to end weaker against the dollar on Thursday.
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Rupee rebounds 26 paise against dollar; snaps 2-day losses
The Indian benchmark S&P BSE Sensex today eased by 14.59 points, or 0.05 per cent after touching its all-time intra-day peak.
If the rupee falls further, it would negatively impact the dollar-based returns of foreign investors, and could influence foreign flows into India.
Forex dealers said besides the dollar gaining against other currencies in the global markets on the back of a strong US economy, increased demand for the American unit from importers weighed on the rupee but a higher opening in the domestic equity markets, capped the fall.
The rupee bounced back by four paise to close at 65.27 per dollar on fresh selling of the American currency by banks.
Heavy dollar selling by banks and exporters alongside debt-related inflows largely supported the rupee
Rupee hits 2-month low, down 21 paise against dollar.
The home currency failed to keep momentum going and largely traded in a narrow range with positive bias in the absence of any market moving factors
Traders will continue to focus on the measures new Prime Minister Narendra Modi-led government will take to bring down the fiscal deficit and fight inflation.
The dollar index was up by a whopping 0.45 per cent against basket of six major global rivals, which also pushed the rupee to log its biggest daily loss since September 15.
This is its lowest level since August 30
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