Indian rupee recovered sharply on Tuesday to rise on suspected intervention by the Reserve Bank of India (RBI) after falling to a near 16-month low in early trade.

State-run banks were seen selling dollars around 67.67 level, dealers said. The RBI typically intervenes in the foreign exchange market via state banks.

The central bank likely sold dollars via state banks at 67.67 level to stem the rupee fall, said dealers.

The Indian rupee sharply retraced all its losses to rise to the day's high of 67.5350 to the dollar, after falling to 67.7975 in early trade, its weakest since Jan. 31, 2017. It had closed at 67.50 on Monday.

"This time the intervention from RBI seemed quite decisive," said a dealer at a foreign bank.