The previous low for rupee was 68.8650 vs dollar on November 24, 2016.
"If crude oil continues to be on the boil, the dollar extends its gains, the Trump administration persists with its policy of imposing new duties on imports, and USA interest rates keep rising (which, in turn, will trigger outflows from emerging markets), the rupee could test 70 levels next month", said a currency dealer with a public sector bank.
The central bank is estimated to have sold about Dollars 700 million-USD 800 million, HDFC Bank analysts wrote in a note.
To put the fall in perspective, the rupee has lost 7.7 percent of its value so far in 2018.
Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices kept the rupee under pressure.
"Weakening at this pace shatters confidence".
According to analysts, demand for dollar is firm due to recent rise in crude oil prices. Earlier this year, the Reserve Bank of India increased corporate-bond investment limits and relaxed rules for foreign owners of government bonds. RBI data shows the rupee is overvalued by 14.67 per cent as of May.
The volatility is being driven by global factors, including proposed United States sanctions on Iran and the mismatch in demand and supply of oil, said Subhash Chandra Garg, the economic affairs secretary in the finance ministry. India's current account deficit (CAD) has already widened 42 per cent year-on-year to $160 billion in FY18, and a high deficit means the country has to sell rupees and buy dollars to pay its bills.
The Reserve Bank of India, the country's central bank, is finding it tough to contain the falling rupee.
"Depreciation in the rupee will have only a marginal positive effect on exports because the extent by which the depreciation would offset cost disadvantages to Indian exporters would be limited and so the margin adjustment requirement would be large", he said.
Shares of software service exporters such as Infosys rose 1.5 percent but investors are cautious amid volatile market conditions. "Though technically exporters should benefit, the world markets are in a turmoil and people will wait for things to settle down a bit before booking new orders", said Pritam Kumar Patnaik, business head - Reliance Commodities Ltd.
Borrowing to invest in India also becomes expensive.