The rupee made a sharp recovery in the final trading hours of Tuesday after having been stable for a week. The domestic currency has closed at 95.41 on Tuesday, compared with 95.68 a week ago.Crude oil prices declining over 2 per cent on Tuesday aided the rupee’s recovery. The Brent crude oil price currently stands at $89.50/barrel; it is down nearly 5 per cent so far this week, after gaining 6.6 per cent last week. However, uncertainty surrounding the Strait of Hormuz continues to pose an upside risk to oil prices.Foreign flows remained positive. According to NSDL data, net FPI inflows stood at about $693 million over the past week, taking the cumulative inflows in August so far to around $2.4 billion.Dollar inflows have received an additional boost from the special USD-INR swap facility linked to FCNR(B) deposits, with inflows amounting to around $65 billion ahead of August 31, the revised deadline. Meanwhile, India’s foreign exchange reserves jumped nearly $10 billion in the week ended August 14 to $716.9 billion, indicating that the RBI has been rebuilding its reserve buffer.Geopolitical risks, however, remain elevated. The US has broadened sanctions on Iran, targeting sectors including aviation, digital assets, gold, technology and shipping, besides several individuals and vessels. US has also warned countries about continued business ties with Iran, adding another layer of uncertainty to global markets.Overall, positive foreign flows, softer crude prices and a weaker dollar are providing support to the rupee. However, geopolitical uncertainty, particularly its potential impact on oil prices, and RBI using incoming dollars to build reserves, continues to limit the scope for appreciation.Chart The rupee, broke its 95.56-95.76 range on the upside on Tuesday. Thus, the support at 95.80 has held very well. Need to see if the rise on Tuesday sustains or not. Near-term resistance is at 95.30, which can be tested this week if the currency manages to sustain higher. A break above 95.30 can then take the rupee higher to 94.90, the next resistance.Failure to breach 95.30 and a downward reversal from there can take the rupee down to 95.75-95.80 again. In case the bears gain traction and the support at 95.80 is breached, the rupee can drop to 96.20 or even to 96.50.The dollar index, which lost 0.8 per cent last week and closed at 98.84 on Friday, has now inched higher to 99. It is likely to rise to 99.40-99.50 band, which can cap the rally. That said, a breakout of 99.50 can bring back the bullishness.However, a decline, either from the current level of 99 or after rising to the 99.40-99.50 region, might drag the dollar index to 98.50 or even to 98.Outlook The rupee can test 95.30 in the near-term. The price action, thereafter, will need a close watch to see if the domestic currency is extending its gains or not. The expected trading range for the week can be 95.30-95.80.Published on August 25, 2026