According to traders with knowledge of the matter, the Reserve Bank of India has been selling US dollars in both offshore and onshore foreign exchange markets to support the rupee. These traders requested anonymity as they were not authorized to speak publicly on the matter.

The USD/INR pair rose 0.2% to 96.4375.

The one-month non-deliverable forward (NDF) for USD/INR initially rose 0.2% and is now largely flat.

The traders indicated that the scale of the dollar selling was not particularly substantial.

A spokesperson for the Reserve Bank of India did not immediately respond to a request for comment sent via email.

The central bank's intervention comes as the rupee approaches the historic low of 96.9650 it reached in May. The primary driver of the rupee's weakness is a renewed surge in oil prices stemming from escalating US-Iran tensions.

It is noted that the rupee has nearly erased all the gains it achieved since authorities announced measures in early June aimed at attracting capital inflows.

Year-to-date, the rupee has depreciated by approximately 7%.