The rupee, which is partially convertible, traded at lowest on Tuesday and it crossed the all-time record low of 65.56 last week.
As the rupee continued its free fall, the share markets also tumbled. BSE Sensex fell by 590 points. Nifty closed below 5300 levels, losing 189 points.
While the rupee fell, Union Finance Minister P Chidambaram in Parliament said India is on the path of fiscal consolidation as more dollars are spent than earned.
"Challenges will be there but we must have the courage and clear headedness to fight these challenges. And with your help, we'll overcome these challenges," he said.
He said in Rajya Sabha answering questions from Opposition: "At the moment, we believe the value of the rupee has overshot its true value. We can correct it only by taking medium and long term measures. I cannot say whether the rupee will appreciate... nobody can say that."
"It appreciated in Feb 2013. It came under pressure in May 2013. Rupee will find its level. Our inflation is high, current account deficit has caused concern among investors and analysts, we have to still communicate and once confident increased, true value will get reflected," he said.
He said "we allowed the fiscal deficit to breach and CAD [Current Account Deficit] to swell because of the certain decisions between 2009-2011 after the collapse of the US economy in 2008."
He said the Cabinet Committee on Investment (CCI) has cleared 18 power projects worth Rs 83,772 crore.
--IBNS (Posted on 27-08-2013)