 "An employee counts rupee notes at a cash counter inside a bank in Agartala")
Earlier in the session, the rupee weakened to as much as 67.2550 to the dollar, a level last seen in September 2013, when the country suffered its worst market turmoil since the 1991 balance of payments crisis.
Although traders expect the rupee to weaken further to around 67.50 in the near-term as slumping oil prices and volatility in China's market roil emerging market currencies, they say the currency will remain far above the record low of 68.85 hit in August 2013.
The RBI is also expected to intervene frequently, as it did on Thursday, with traders also anticipating more actions in futures markets after the central bank said in December it was open to that prospect.
"I think the RBI would generally be comfortable with the way the currency is behaving," said Rahul Bajoria, regional economist with Barclays in Singapore.
"Inflation is under check and it will allow the RBI to let the rupee depreciate in a controlled manner, especially if the dollar continues to strengthen," Bajoria said, adding that some depreciation in the currency would benefit exporters.
He expects the rupee to weaken to 69-70 to the dollar by the year-end.
The rupee was trading at 67.2250/2350 to the dollar at 2.22 p.m., after closing on Wednesday at 66.8450/66.8550.
Traders said the RBI may have sold more than $500 million on Thursday to limit the rupee's losses.
Still, the rupee has performed relatively better this year than other Asian emerging market currencies, having lost about 1.6% against the dollar, compared to a fall of around 3.4% in the South Korean won and a drop of around 2.3% in the Malaysian ringgit.
Traders said India's near record-high foreign exchange reserves and annual consumer prices inflation staying on track to meet central bank's 5% target are likely to boost the RBI's rupee management efforts.
India's economy is expected to grow 7.5% in 2015/16 and at a slightly faster 7.8% in 2016/17, a Reuters poll showed on Thursday.
