The Indian rupee on Monday fell to a two-month low, weighed down by rising oil prices and geopolitical uncertainty. The domestic currency went to as low as 96.53 against the dollar during intra-day before settling at 96.45, down 17 paise from the previous close.

Oil prices rose to $ 91.42 per barrel during intra-day, weighing on the rupee. However, it retreated to $ 87.56 after Iran’s foreign ministry said negotiations with the US could be pursued. Later in the day, mediators advanced a proposal to de-escalate the conflict with the U.S. by offering a 10-day ceasefire to explore ways to revive last month’s interim deal, Reuters reported.

The Reserve Bank of India stepped in through its dollar sales to support the currency, said currency dealers. They added that intervention, though not aggressive, prevented further losses, along with a slight retreat in oil prices.

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“The rupee weakened with oil prices climbing to $90 a barrel, but RBI intervention and positive signals regarding mediation helped stabilise sentiment, with the rupee retracing some of its losses,” said Dilip Parmer, currency research analyst, HDFC Securities.

He added that the rupee could still move toward 97 if conditions remain unchanged, but it is more likely that the RBI will step in with regular intervention in the 96.50–97 range.

The rupee was the second worst-performing Asian currency on Monday. So far in the calendar year, the currency declined 7.3%.

The market sentiment has also been affected by FCNR(B) inflows falling short of initial expectations.

“The response for FCNR (B) scheme is quite dull so far. While initial market expectations were for about $60 billion in inflows, market has revised estimates lower now. That means overall there will be a shortfall compared to earlier market expectation. Therefore, the sentiment is weak,” said a forex dealer at a public sector bank.

Meanwhile, post-market hours, the RBI released the data on inflows through its FX measures. Total inflows stood at $20.7 billion, of which $17.4 billion came from FCNR(B) deposits, the data showed.