By Dharamraj Dhutia

(Reuters) - The Indian rupee closed out a second consecutive week of gains against the dollar, a feat it last achieved ​six months ago, supported by flows from the unwinding of residual arbitrage ‌positions, as well as a plunge in crude oil prices after a short-term ceasefire between U.S. and Iran.

The currency ended marginally lower for the day after a choppy session that saw ​it touch a three-week peak of 92.4150 per dollar before slipping to ​92.7550 during the day.

It ended 0.1% lower than its previous close, ⁠gaining 0.4% this week.

In recent sessions, the rupee has drawn support from the ​Reserve Bank of India's move to impose limits on banks' onshore FX net open positions, ​which forced lenders to sell dollars in the local market.

Oil prices dropped after the U.S. and Iran agreed on a two-week truce earlier in the week, easing some concerns about prolonged ​disruptions to the world's crude oil supply.

The impact of both these developments is ​now baked into the current prices, traders said, and the rupee may soon resume its downward ‌trend.

"The ⁠cushion that held the rupee steady is beginning to thin, and this is where the story starts to shift," said Amit Pabari, managing director at FX advisory firm CR Forex.

"Just as domestic support begins to fade, the global backdrop is turning ​uneasy again."

The scope for ​further strength seems ⁠limited, with a gradual move towards 93.50–94.00 levels likely on the cards, he added.

Traders also remain cautious about the durability of the U.S.-Iran ​truce, as reports of continued fighting have kept alive concerns over ​oil supplies, ⁠with the benchmark Brent crude contract trading around $97 per barrel, up from $90 on Wednesday.

Foreign investors continued to remain net sellers of Indian equities, indicating that demand for Indian ⁠assets ​remains weak.

Market participants now await U.S. retail inflation data ​due later in the day, with interest rate futures showing almost no chance of a rate cut ​before September.

Reporting by Dharamraj Dhutia; Editing by Harikrishnan Nair, Mrigank Dhaniwala and Ronojoy Mazumdar

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