As the rupee fell further against the dollar to set a new record and petrol and diesel prices rose to a historic high on Monday, the finance ministry once again cautioned against creating panic and said both the Centre and the Reserve Bank of India were ready with measures.

Rupee breached 72.65 against the dollar weighed down by domestic sell off of equities and bonds. This came shortly after US President Donald Trump's threat to impose tariff on all imports from China raising the spectre of trade war between the two robust economies.

Top finance ministry officials said the market should not panic over the depreciating rupee as the government and the RBI will not shy away from taking measures.

The fall of rupee also triggered a 400 point plunge in the BSE Sensex. Global rating agency Moody's Investors Service too warned that a sustained weakening of the rupee would be credit negative for Indian companies.

On oil front, however, the ministry officials indicated that there was no move to cut excise duty as it would dis-balance government finances but said the states may be asked to cut VAT or local taxes on petrol and diesel to calm down prices.

“There is scope for states to cut down on VAT,” an official said.

Petrol prices touched a new high on Monday. In Delhi, the petrol prices rose by 23 paise to sell st Rs 80.73 per litre. Diesel prices increased by 22 paise to sell at Rs 72.83 a litre.

A somewhat similar increase was also effected in other metro cities.

Senior BJP leader Subramanian Swamy, however, demanded Prime Minister Narendra Modi's intervention to check the rise in fuel prices that has prompted protests.

“I feel that the macroeconomic price for petrol is Rs 40 and somehow the PM must ask the Petroleum Minister to think as a part of Economic Affairs Ministry and not as Petroleum Minister and stop setting prices so high that people can go to the point of revolt,” Swami said.

The Opposition parties resorted to a Bharat Bandh to protest against unrelenting rise in fuel prices.