Broader losses were, however, capped as domestic shares managed to edge higher in late trade on the back of brighter corporate results.
Fund flows are expected to be key for the rupee going forward, especially in a fluctuating global risk aversion scenario.
Foreign investors have sold a net $84.14 million in shares and $966.62 million of debt in August so far, as per official data.
"Despite the weak IIP (industrial output) numbers, the outlook on foreign funds flows into India is not so bad. I expect the dollar-rupee to stabilize at these levels in the near term," said Vishweshwara M., assistant general manager, treasury, at Karnataka Bank in Mumbai.
The partially convertible rupee closed at 61.215/225 per dollar, compared with Tuesday's close of 61.08/09.
Sentiment was hit after retail inflation edged up to 7.96 percent in July from 7.31 percent a month earlier, according to data on Tuesday.
Traders will now wait for July Wholesale Price Inflation numbers due on Thursday. A Reuters poll predicts that WPI likely eased to 5.10 percent in July from 5.43 percent the month before.
In the offshore non-deliverable forwards, the one-month contract was at 61.53/58, while the three-month contract was at 62.13/62.23