The local currency also posted its third successive weekly drop as it slipped by 60 paise since June 6.
A sharp fall in domestic stock market also affected rupee today as the Sensex dropped 348.04 points or 1.36 per cent.
Crude prices extended the previous day's rally to sit at nine-month highs after militants closed in on Iraq's capital Baghdad, fuelling fears over supplies from the crude producer.
US benchmark, West Texas Intermediate, advanced 73 cents to USD 107.26 in late-morning trade after surging USD 2.13 in New York yesterday to reach its highest level since September.
The rupee opened lower at 59.31 per dollar as against the last closing level of 59.25 per dollar at the Interbank Interbank Foreign Exchange (Forex) Market. It dropped further to 59.80 per dollar before settling at at 59.77 per dollar, showing a loss of 52 paise, or 0.88 per cent -- its biggest drop since January 24, 2014 when it had dropped by 73 paise.
Intra-day, the rupee moved in a range of 59.30 per dollar and 59.80 per dollar.
"USD/INR pair witnessed higher movement in spite of improved Indian economic data with oil importers buying dollars. Crude oil is moving higher amid turmoil in Iraq which can lead to supply concerns," said Admisi Forex India Pvt Ltd.
The dollar index was up 0.08 per cent against a basket of six major global rivals, indicating safe-haven tendencies among global investors.
According to provisional data from Indian bourses, overseas investors pumped Rs 1,100 crore in equities today.
The premium for forward dollar moved down further due to sustained receipts by exporters.
The benchmark six-month premium payable in November declined to 228-230 paise from 230-232 paise previously.
Far-forward contracts maturing in May, 2015 also eased to 467-1/2-469-1/2 paise from 468-470 paise.
The Reserve Bank of India fixed the reference rate for dollar at 59.4783 and for the euro at 80.7120.
The rupee remained weak against pound to 101.31 from previous close of 99.70 while fell back against the euro to 80.87 from 80.14. It too reacted downwards to 58.59 per 100 Japanese yen from 58.04.