The Indian rupee closed at its strongest level in two weeks on Tuesday. A sharp decline in oil prices and probable central bank action supported the currency’s recovery from near-record lows. Brent crude fell 3 percent to 85.6 dollars per barrel, its lowest point in more than a week. This helped the rupee reach 95.8525 against the dollar, a gain of 0.1 percent from the prior close. The currency had touched a record low of 96.96 on May 20. State-run banks sold dollars during the session, likely acting for the Reserve Bank of India, according to traders. The central bank has stepped into every trading session since Friday to defend the currency, signaling reduced tolerance for further weakness. This intervention follows stronger-than-expected inflows of about 40 billion dollars since early June, driven by policy steps announced last month. One trader at a state-run bank described the approach as setting a soft line in the sand for the rupee. However, a sharp rebound in crude prices could renew pressure. Hopes for progress in the U.S.-Iran conflict have cut oil prices 15 percent from last week’s peak, though traders remain cautious after past reversals during the conflict that began in late February. Global equities declined as investors sold chipmakers amid concerns over Chinese competition and financing for artificial intelligence growth, while rising odds of a Federal Reserve rate increase weighed on sentiment. Interest rate futures priced in a one-in-three chance of a Fed hike on Wednesday. The dollar index edged higher to 101.6.
