The Indian rupee narrowly avoided a record low on Friday as the Reserve Bank of India stepped in to counter mounting pressure from surging oil prices, weak domestic equities, and renewed corporate hedging, according to traders. Main Developments State-run banks began selling dollars shortly before the market opened at 9 a.m. IST, likely acting on behalf of the RBI, five traders told Reuters. The selling continued through most of the session, pushing the rupee higher before it settled at 96.5625 per U.S. dollar, little changed for the day. Brent crude briefly topped $100 a barrel for the first time in two months before retreating about 4%. The price spike followed developments in the Middle East pointing to worsening supply disruptions, including U.S. President Donald Trump's promise of “major military punishment” for Iran and its Houthi allies after Yemeni fighters struck two Saudi oil tankers in the Red Sea. Read also: Why oil's return above $100 is rattling Indian stocks Background India imports nearly 90% of its crude oil needs, making it highly vulnerable to price shocks. Such shocks can fan inflation, strain external balances, and weigh on the rupee by boosting demand for dollars. The rupee recently approached its record low of 96.96, hit in May, prompting the RBI to intervene across multiple market segments on Friday. Alongside spot dollar sales and intervention in the non-deliverable forwards market, the central bank likely conducted far-tenor dollar-rupee buy/sell swaps to offset the liquidity impact of its spot interventions, traders said. The 15-month dollar-rupee forward premium declined 7 paisa to INR 3.47. Why It Matters Elevated hedging against rupee weakness has added to the currency's strain. Clearing house data shows net weekly forward dollar buying by merchants fell to roughly $2.9–$5.1 billion in early July before rebounding to about $7.1 billion in the week ending July 17. The rupee's recent fall and rise in oil prices “has likely surprised markets and, in turn, spawned another wave of hedging,” analysts at J.P. Morgan said in a note. What's Next The RBI's multi-pronged intervention suggests it remains committed to preventing a breach of the rupee's record low. However, further oil price volatility and corporate hedging demand could test the central bank's ability to stabilize the currency in the coming sessions.