The rupee declined to 56.37 versus its Tuesday close of 55.9550-9650, tracking losses in domestic share market and broad gains in the dollar versus majors and other Asian currencies. The Indian currency is now trading at its lowest since July 25, 2012, when it hit the 56.43 mark against the greenback. (Read: Rupee may hit 60 soon)
Traders said losses in the domestic share market and other Asian currencies helped the dollar.
Some dealers cited non-deliverable forwards-related dollar buying in the domestic market as one of the key reasons for the rupee's weakness.
The three-month NDF (non-deliverable forwards) traded at 57.24 compared with its onshore counterpart which stands at 57.26.
Dealers said month-end dollar demand from oil companies and other importers is also likely to boost the dollar.
The dollar gained broadly in early Asian trade on Wednesday after robust economic data boosted Treasury yields and raised expectations that the Fed may make an early exit from its easing scheme, making the greenback more attractive. (Read: How a weaker rupee affects you)
(With inputs from Reuters)