Mumbai, Jul 24 (PTI) The rupee recovered 20 paise to close at 96.53 against the US dollar on Friday amid likely intervention by the Reserve Bank of India (RBI).

A combination of factors, including heightened tensions in West Asia, FII outflows, and sustained negative sentiments at the domestic equity markets, maintained pressure on the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened weaker at 96.81 and traded in the range of 96.30-96.81 before eventually settling at 96.53, up 20 paise from its previous close.

On Thursday, the rupee ended 20 paise weaker at 96.73 against the US dollar.

Meanwhile, the US military announced the 13th night of strikes on Thursday against Iran as clashes escalated over shipping routes. The attacks came after Yemen's Houthi rebels said they attacked two Saudi oil tankers in the Red Sea, potentially widening the Iran war as international oil topped USD 100 a barrel.

V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said, "Rupee has been stable on Friday... There are reports of RBI intervention to prevent further depreciation of the rupee. Some PSU banks are also reported to have sold dollars to stabilise the rupee. If crude declines next week, it can further help the rupee to stabilise." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading down 0.03 per cent at 101.41.

Brent crude, the global oil benchmark, was trading 3.57 per cent lower at USD 97.10 per barrel in futures trade.

On the domestic equity market front, Sensex settled lower for the fifth day in a row, falling 331.62 points, or 0.43 per cent, to 76,059.77, while the Nifty was down 102.15 points, or 0.43 per cent, to 23,767.45.

"We expect the rupee to trade with a negative bias on further escalation in tensions between the US and Iran. Elevated crude oil prices may also pressure the rupee. However, diplomatic talks between the two nations may prevent a sharp fall in the rupee," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

Any intervention by the RBI may also support the rupee at lower levels, he said, adding that the USD-INR spot price is expected to trade in a range of 96.30-96.85.

Foreign Institutional Investors offloaded equities worth Rs 3,892.77 crore on a net basis on Friday, according to exchange data. PTI TRB DRR

Foreign exchange market stabilisation supported rupee recovery as investor outflows, geopolitical tensions and elevated crude prices maintained currency pressure. Foreign exchange market conditions saw the rupee recover against the US dollar amid reports of Reserve Bank of India intervention and dollar sales by public-sector banks to limit further depreciation. Foreign institutional investor outflows, weak domestic equity sentiment, geopolitical tensions, and elevated crude oil prices continued to pressure the currency. A decline in crude prices, diplomatic engagement, and central-bank intervention were identified as potential stabilising factors.