The rupee remained largely steady over the past week and closed at 94.67 against the dollar on Tuesday, compared to 94.74 a week earlier.This is despite the dollar index gaining by 1.8 per cent during this period. The local currency managed to hold its ground despite continued strength in the dollar, supported by positive domestic factors.Foreign flows saw a notable turnaround. According to NSDL data, net FPI inflows stood at nearly $2.4 billion over the past week, reversing the earlier outflows and taking the cumulative investment in June so far to about $531 million.Another supportive factor has been the decline in crude oil prices. Brent crude futures fell about 10 per cent last week and have remained largely flat so far this week.More importantly, India’s crude oil basket averaged $83.85 per barrel in June, a sharp decline from $106.23 in March and $114.48 in April. Lower oil prices help reduce pressure on the trade balance, inflation and the rupee.Domestic economic indicators have also been encouraging. India’s industrial production expanded 5.1 per cent in May, exceeding market expectations of 4.7 per cent and signalling resilience in economic activity.Meanwhile, India’s foreign exchange reserves rose to $672.59 billion in the week ended June 19. The increase suggests that the Reserve Bank of India has started rebuilding its reserves after months of intervention to smoothen the volatility in the currency market.The dollar remains the key challenge for the rupee.The dollar index, currently around 101.40, has sustained above the psychologically 100-mark, supported by expectations of higher US interest rates.This has limited the rupee’s gain despite supportive factors such as lower crude oil prices and improving foreign inflows.ChartsThe rupee has been oscillating within the 94.20–94.90 range over the past two weeks. While the recent recovery appears to have stalled near 94.20, the local currency has also found support at 94.90. Therefore, the next short-term move is likely to depend on the direction of the breakout from this range.A decisive break above 94.20 can strengthen the recovery and lift the rupee to 93.50. On the other hand, a breach of the support at 94.90 could trigger a fresh bout of weakness, dragging the currency towards 95.80, a notable support level.The dollar index will remain a key factor. The index has been in an uptrend since February and has gained further traction after finding support at 97.80 in May. As long as it remains above the 100 and 101 levels, the broader bias stays bullish.That said, there is a possibility of a corrective decline towards the support-turned-resistance level of 100.50. Such a move could keep the rupee in consolidation mode, albeit with a positive bias, and potentially help it appreciate towards 94.However, if the dollar index resumes its uptrend, it can advance towards 102 in the near term. In that scenario, the rupee may come under renewed pressure and weaken towards 95.80.OutlookThe rupee appears set to remain range-bound in the near term. While lower crude oil prices and improving foreign inflows are supportive, the strength in the dollar is likely to limit gains. The key levels to watch are 94.20 and 94.90.Published on June 30, 2026