The Finance Ministry on Wednesday asserted that the government and the RBI will do everything to ensure that the rupee does not depreciate to "unreasonable levels".
The statement assumes significance as the Indian currency crashed to a lifetime low of 72.91 to the dollar in early trade on Wednesday.
The rupee, after crashing to a lifetime low in early trade, rebounded by 69 paise to trade at 72.00 to the US dollar in late afternoon trade on suspected intervention by the central bank.
"Government and RBI will do everything to ensure that rupee does not slide to unreasonable levels. Today’s correction seems to reflect that realisation," Economic Affairs Secretary Subhash Chandra Garg tweeted.
In the morning trade, the rupee collapsed to a lifetime low of 72.91 against the dollar, amid surging crude oil prices and uanabated foreign fund outflows.
He said there was "no fundamental rationale" for the rupee to depreciate to levels seen till Tuesday.
"It reflected overreaction of market operators," Garg said.
The currency traded in a range of 71.86 to 72.91 in the day trade.
On Tuesday, after scaling a historic low of 72.74, the local unit, finally settled day at 72.69, showing a loss of 24 paise, or 0.33 per cent.