The Reserve Bank of India likely stepped into the foreign exchange market on Tuesday to support the rupee as higher oil prices and steady corporate demand for dollars put pressure on the currency, according to a Reuters report citing four traders. The rupee remained almost unchanged at 95.7350 per dollar. It stayed within a trading range of less than one paisa as RBI intervention helped keep volatility under control.

State-run banks were seen offering dollars in the market. Traders said the banks were most likely acting on behalf of the RBI. The central bank has continued to intervene over recent trading sessions. Its actions have kept the rupee in a narrow range despite volatility in global markets.

The rupee opened at 95.74 per dollar on Tuesday, down 4 paise from Monday's close. On Monday, the currency had settled 1 paisa higher at 95.70 per dollar. Forex traders told news agency PTI that higher crude prices and demand for dollars from importers were weighing on the rupee. RBI intervention through state-run banks helped limit a sharper fall in the currency.

The rupee has remained range-bound for nearly two weeks. Oil companies and the RBI have been buying dollars when the rupee moves towards the lower end of the range. The central bank has been selling dollars around the 95.75 level, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

“Overall, the rupee remains firmly range-bound around Rs 95.50–96.00, with oil prices and RBI intervention likely to remain the key near-term drivers,” Bhansali said, according to PTI.

Oil prices have added to the pressure on the rupee. Brent crude, the global oil benchmark, was trading 0.30% higher at $92.45 a barrel in futures trade, PTI reported. India relies heavily on imported crude oil, which increases demand for dollars when global oil prices rise.

The dollar also remained firm against major currencies. The dollar index, which tracks the US currency against a basket of six major currencies, stood at 99.04, up 0.04%. Safe-haven demand supported the dollar after the United States escalated sanctions on Iran.

Renewed geopolitical uncertainty around Iran has also affected the rupee. Weakness in Asian equity markets added to the pressure on the currency. These factors have kept the rupee under close watch as the RBI continues to manage volatility in the foreign exchange market.

Indian equity markets also opened lower on Tuesday. The Sensex fell 30 points to 77,336.32 in early trade. The Nifty declined 38.80 points to 24,179.50. Despite the weak opening, foreign institutional investors remained buyers. They purchased Indian equities worth Rs 1,181.66 crore on a net basis on Monday.

Meanwhile, the RBI's special USD-INR forex swap facility for FCNR(B) deposits, overseas foreign currency borrowings and external commercial borrowings has attracted significant foreign exchange inflows. The facility had mobilised $73 billion as of August 21. The inflows showed strong participation from non-resident Indians, according to the report.

The rupee is now trading in a closely watched range of around Rs 95.50 to Rs 96.00 per dollar. Oil prices, demand for dollars from importers, global market conditions and RBI intervention are likely to remain the main factors influencing the currency in the near term.