Mumbai, Aug 3 (PTI) The rupee strengthened against the US currency for the sixth consecutive session on Monday, closing higher by 12 paise at 95.31 (provisional) following a sharp drop in global crude oil prices and a softer greenback after US President Donald Trump decided to hold off strikes against Iran.

FII inflows and gains in domestic stock markets provided further support to the local unit, forex traders said.

At the interbank foreign exchange, the rupee opened at 95.15 against the greenback and traded in a tight range of 95.11-95.34 during the day. It eventually settled at 95.31 (provisional), up 12 paise from its previous close.

The rupee has rebounded by more than 3 per cent in the six trading sessions to Monday, aided by FII inflows and easing of tensions in the West Asia region. The unit had closed higher by 7 paise at 95.43 against the US dollar on Friday.

US President Donald Trump on Sunday said he decided to hold off on ordering American forces to carry out new strikes against Iran at the urging of Gulf allies Qatar, Saudi Arabia, and the United Arab Emirates.

The president added that a plan was in place for the US forces to carry out "the biggest attack since World War II" on Sunday. However, he decided to scrap the plan and give diplomacy more time to play out after hearing from key Gulf leaders -- including Saudi Crown Prince Mohammed bin Salman -- as well as at the request of unnamed Iranian officials.

"The rupee gained as US President Donald Trump cancelled his plan to attack Iran over the weekend. He also said the US and Iran are due to negotiate Monday evening. This boosted global risk sentiments. A sharp fall in crude oil prices, too, supported the rupee," Anuj Choudhary, Research Analyst, Mirae Asset ShareKhan, said.

"We expect the rupee to trade with a slight positive bias on a rise in risk appetite in global markets... Any renewed geopolitical tensions between the US and Iran may cap sharp upside. USD-INR spot price is expected to trade in the range of Rs 94.90 to Rs 95.50," he said.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.07 per cent lower at 99.84.

Brent crude futures, the global oil benchmark, were trading 5.06 per cent lower at USD 83.48 per barrel.

On the domestic equity market front, the Sensex rose 544.39 points, or 0.70 per cent, to close at 78,639.03, while the Nifty was up 390.70 points, or 1.60 per cent, to settle at 24,774.30.

Foreign Institutional Investors purchased equities worth Rs 277.48 crore on a net basis on Friday, according to exchange data.

The RBI data released on Friday showed that the country's forex reserves jumped USD 6.118 billion to USD 682.354 billion during the week ended July 24. In the previous reporting week, the overall reserves had increased USD 1.08 billion to USD 676.237 billion.

The central government's fiscal deficit stood at 18.2 per cent of the full-year target at the end of June, according to data released by the Controller General of Accounts on Friday. PTI TRB TRB MR

Foreign exchange market movement strengthened the rupee as lower crude prices, investment inflows and improved risk sentiment provided support. Foreign exchange market movement saw the rupee strengthen for a sixth consecutive trading session against the US dollar, supported by declining global crude oil prices, a softer dollar, foreign institutional investment inflows and gains in domestic equity markets. Improved global risk sentiment followed the decision to defer planned US military strikes against Iran and allow diplomatic engagement. Renewed geopolitical tensions were identified as a factor that could limit further appreciation.