The rupee recovered after breaching the key 80 per dollar mark for the first time ever on Tuesday and hit seven straight intra-day record lows for the seventh straight session.
Bloomberg reported the rupee was last at 79.9487, after trading in the range of a high of 79.8675 and a low of 80.0600 against the greenback during the session on Tuesday.
That marks the first time the rupee has crossed the 80 a dollar mark, a new all-time low.
PTI said the rupee recovered from its all-time low of 80.05 to close 6 paise higher provisionally at 79.92 against the US dollar on Tuesday, tracking its regional peers and a positive trend in domestic equities, from the previous close of 79.98.
"The Indian rupee broke the level of 80 after many days' failed efforts by the dollar bulls amid higher crude oil prices. However, the central bank's intervention and stronger regional currencies and equities supported the rupee to erase early morning losses," Dilip Parmar, Research Analyst at HDFC Securities, told PTI.
Mr Parmar further said the near-term consolidation in the rupee is likely along with the dollar index ahead of the European Central Bank (ECB) and Bank of Japan policy meetings on Thursday.
Reuters reported that the Reserve Bank of India intervened in the currency market to help the rupee steady slightly after it weakened to 80.05 per dollar, notching a record low for a seventh session.
"The rupee is going to weaken further; that is a given. But how soon and how much will depend on the RBI," a senior trader at a private bank told Reuters.
A recovery in domestic shares also favoured the Indian currency.
Like most Asian currencies, the rupee has been falling in recent months as risk aversion has risen on expectations of the US Federal Reserve raising rates aggressively to curb high inflation and prompting investors to flee riskier assets.
The dollar hovered just and below its multi-year highs but above a one-week low reached overnight versus major peers as markets reduced the odds of a percentage-point Federal Reserve rate hike this month.
The Reserve Bank of India has been intervening in both the spot and forwards markets to slow the rupee's fall and has taken several measures in recent weeks to boost foreign fund inflows.
But, traders said the rupee was being hurt by a severe dollar shortage and expectations that India's current and trade account deficits will continue to widen.
While a recovery in Indian benchmark equity indices on Tuesday helped stabilise the rupee, traders warned it could be just a temporary respite.
"The rupee depreciation will firm up margins for the IT companies in the near term," Tanushree Banerjee, co-head of research at Equitymaster, told Reuters.
"Having said that, due to higher employee and travel costs, the margin upside may be limited. Also, over time the dollar contracts could get renegotiated and margins could get normalized."
So far in 2022, foreign investors have made net sales of Indian shares totalling more than $30 billion, and traders said unless this trend reverses, the downward bias on the rupee will continue.