The Indian rupee recovered on Tuesday (July 21) after five consecutive sessions of losses, closing stronger against the US dollar as softer crude oil prices and fresh foreign exchange inflows helped ease pressure on the domestic currency.

The rupee settled at 96.24 per US dollar, compared with Monday's close of 96.45, after rising to an intraday high of 96.13.

Despite Tuesday's gains, the currency remains more than 10 per cent weaker than its level a year ago and continues to be the worst-performing major Asian currency over that period.

Market participants attributed the recovery partly to a decline in crude prices following reports of diplomatic efforts between the US and Iran. Intermittent dollar sales by the Reserve Bank of India (RBI) also helped support the rupee, although demand for the US currency from oil marketing companies and other importers limited the gains.

The currency also received support from the RBI's latest disclosure on foreign exchange inflows generated by measures announced in June to attract overseas capital. The central bank said on Tuesday that the measures had helped mobilise $20.72 billion between June 8 and July 17.

The figure represents the first official account of inflows following the package, which included a concessional swap window for FCNR(B) deposits and external commercial borrowings, relaxed reserve requirements and tax exemptions for certain foreign investments in government securities.

FCNR(B) deposits accounted for $17.4 billion of the total inflows, according to the RBI.

The latest data offered some relief to currency markets by signalling stronger foreign exchange availability at a time when the rupee has faced sustained pressure.

However, traders remained cautious as importer demand for dollars and broader global currency movements continued to pose challenges to a sustained recovery in the domestic unit.