In the intraday trade, rupee moved in the range of 70.18-70.74 before closing at 70.73 against the dollar -- a level not seen since March 1.

This is the highest single-day fall for the rupee since August 2013.

"India's rupee tumbled the most since December triggered by depreciating Yuan. Chinese Yuan weakened beyond 7 per dollar for the first time since 2008, signalling a new phase in the trade war between US and China," Press Trust of India quoted VK Sharma, head PCG & capital markets strategy, HDFC Securities, as saying.

Besides the US-China trade-related concerns, Home Minister Amit Shah moving a resolution in the Rajya Sabha that all clauses of Article 370 will not be applicable to Jammu and Kashmir kept the pressure on the rupee, the report said citing forex traders.

Traders said the near term focus will be on the RBI's monetary policy meeting scheduled to announce outcome on August 7.

"Widely, RBI is expected to cut rates further by 25 bps and continue to hold the accommodative stance which will weigh on rupee," PTI quoted Rahul Gupta, currency research head, Emkay Global Financial Services, as saying.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 2,016 crore on Monday, as per provisional data on the NSE.

The domestic benchmark indices also plummeted in Monday's session. The Sensex fell as much as 701 points and the Nifty 50 index dropped below 11,800.

The Sensex ended 418 points or 1.1 per cent lower at 36,700 and the NSE Nifty 50 Index dropped 1.2 per cent or 135 points to close at 10,863.