hello
this would be me suggestion if the idea is to replace the "faulty" data segment with a piecewise linear segment and then do a further smoothing
y = y+ randn(size(x))/10;
[val_min,ind_min] = min(dy);
[val_max,ind_max] = max(dy);
y(ind_min-ind_offset:ind_max+ind_offset) = linspace(y(ind_min-ind_offset),y(ind_max+ind_offset),ind_max-ind_min+1+2*ind_offset);
ys = smoothdata(y,'gaussian',N);
plot(x,yy,'b',x,y,'k',x,ys,'r-.','LineWidth',2);
legend('raw data','interpolated data','interpolated and smoothed data')
now there is another possibility is to "shift" upwards this segement (if we want to keep the data) and do a smoothing as well
y = y+ randn(size(x))/10;
[val_min,ind_min] = min(dy);
[val_max,ind_max] = max(dy);
delta = (y(ind_min-ind_offset1) + y(ind_max+ind_offset2))/2 - mean(y(ind_min-ind_offset1:ind_max+ind_offset2));
y(ind_min-ind_offset1:ind_max+ind_offset2) = y(ind_min-ind_offset1:ind_max+ind_offset2) + delta;
ys = smoothdata(y,'gaussian',N);