MUMBAI, Aug 25 (Reuters) - The Indian rupee rose to an over one-week high on Tuesday, supported by a pullback in oil prices, after the currency spent much of the session in a narrow range as central bank intervention kept a firm lid on losses.
The rupee closed at 95.4125 per dollar, up 0.3% from its close at 95.7450 in the previous session.
While the currency hovered in a 95.70-95.75 band for most of the session, it strengthened later in the session after Brent crude prices slipped more than 3% to $89.2 per barrel.
Oil prices fell as traders shrugged off the latest U.S. sanctions threat against Iran, viewing economic pressure as posing less risk to oil supplies than a military escalation.
Washington warned countries to cut their business ties with Iran or risk secondary sanctions. However, the Treasury Department stopped short of actually imposing penalties.
Earlier in the day, likely intervention by the Reserve Bank of India, similar to that seen in recent sessions, helped limit the pressure on the currency.
Persistent interventions by the central bank have curbed the rupee's volatility over the last two weeks, making it among Asia's least volatile units despite ructions in global cues.
Elsewhere, Asian currencies traded slightly lower, while the dollar index ticked below the 99 mark.
Besides keeping an eye on developments in the Middle East, investors are awaiting remarks from Federal Reserve Chair Kevin Warsh on Friday for cues on the outlook for U.S. interest rates.
"We think the Fed is on an extended hold, but policymakers have been clear that progress on inflation is needed, so the risk of rate hikes remains," analysts at ANZ said in a note.
Reporting by Jaspreet Kalra; Editing by Rashmi Aich, Janane Venkatraman and Eileen Soreng
