Mounting worries over slowing world economies and renewed uncertainty over Greece's bailout added to the downward pressure on the rupee, traders said.
At 11:01 a.m. (0531 GMT), the rupee was at 50.64/65 to the dollar, after dipping to 50.76, its lowest since Jan. 18, according to Thomson Reuters data. The unit had closed at 50.36/37 on Tuesday.
"There is huge demand in the market. It seems that everybody just wants to buy dollars including most sections of importers," said a foreign exchange dealer with a large state-run bank.
Local oil refiners have been buying dollars aggressively in the past few sessions due to a recent surge in global oil prices, with India importing nearly 80 percent of its oil needs.
Demand for gold in India, the world's largest consumer of the bullion, has climbed amid the festival and wedding season after prices fell 2.8 percent since Feb. 27.
Outlook for foreign inflows has been clouded as expectations of a revival in reforms were jolted after the Congress party's severe losses in crucial state elections on Tuesday.
However, expectations that the Reserve Bank of India may take action and intervene actively in the foreign exchange market to support the rupee is likely to provide some support to the currency, traders said.
"People do remember what happened last time when they tested RBI's resolve so they will be even more careful now. You don't want the central bank to shut you from the market completely," said a senior currency trader with a private sector bank.
The RBI has been intervening in the currency market over the past few months to support the rupee, which touched a record low of 54.30 on Dec. 15, and took numerous steps including slashing of banks' trading limits to cut speculative trades.
The one-month offshore non-deliverable forward contracts were at 51.04.
In the currency futures market, the most-traded near-month dollar-rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange were all around 50.89, on a total volume of $1.92 billion.