The Indian rupee climbed to its highest level in more than a week on Tuesday, lifted by a fall in global oil prices and by measures from the central bank that kept a lid on the currency's losses.

Brent crude, the global oil benchmark, dropped by more than 3% during the session. Lower oil prices tend to support the rupee because India imports the bulk of the crude oil it consumes, and a reduced import bill eases demand for US dollars in the domestic currency market. The exposure is structural: India is the world's third-largest importer of crude and meets more than 80% of its oil needs from overseas, making the fuel one of the biggest items in the country's import bill and a recurring pressure point for the trade balance whenever prices climb.

Even with the advance, the rupee traded within a narrow band throughout the day. The Reserve Bank of India (RBI), the country's central bank, routinely operates in the foreign exchange market to smooth excessive volatility in the currency, and its steps helped cap losses during the session. The RBI leans on India's foreign exchange reserves, which are among the largest in the world at more than $600 billion, supplying or absorbing dollars as needed, usually through state-run lenders, rather than targeting any specific level for the currency.

Elsewhere in currency markets, most Asian currencies slipped slightly, while the dollar index, which measures the US dollar against a basket of major currencies, fell below the 99 level. The dollar index is a key external cue for Asian exchange rates, as shifts in the US currency's broader strength tend to ripple across regional currency pairs.

Currency traders watch the direction of Brent crude, moves in the dollar index, and foreign fund flows into Indian markets as their main near-term cues for the rupee, the same set of drivers that shaped Tuesday's session.

The report was first published by Economic Times Markets.