The Indian rupee slipped to its weakest in more than a week on Monday as oil prices marched higher, dragging down regional stocks and currencies as investors fretted over the impact of high energy prices and geopolitical uncertainty. Dollar sales from state-run banks, most likely on behalf of the Reserve Bank of India, curbed losses with the rupee settling down 0.2% at 95.9825 per dollar. A glut of capital inflows sparked by policy measures has given the Indian central bank ammunition to go against the tide but investors are keeping an eye on the persistence of that defence. Between June 8 and September 18, these measures drew in $143.6 billion. India's central bank has net sold bonds worth 1 trillion rupees this financial year, its biggest annual net bond sale in more than a decade, treasury officials said, with market participants expecting the total to double by December. The Reserve Bank of India is withdrawing liquidity from a banking system flush with cash after it allowed lenders to raise dollars via a special window. While the inflow helped protect the nation's FX reserves and support the rupee as oil prices rose, it pushed overnight rates below ?the RBI policy rate. The dollar was steady near a two-month high on Monday as the US-Iran standoff pushed up oil prices and Treasury yields, while investors looked ahead to a data-packed week for further clues about the path of central bank policy. The dollar index , which measures the US currency against a basket of peers, was little changed at 101.16 but was still set for a 1.7% monthly gain, its biggest since June. The pound rebounded from multi-month lows ?against both the dollar and the euro on Monday as investors priced in tighter monetary policy from the Bank of England as inflation pressures build. Sterling was last up 0.1% against the dollar at $1.3259, rising from a three-month low of $1.3204 hit last week. It was still on track for a fall of over 2% this month as the dollar has rallied sharply on expectations for tighter policy from the Federal Reserve. Against the euro, the pound was up 0.2% at ?85.75 pence after touching its weakest level against the single currency since July 1 on Friday. Oil prices Climbed more than 3% with Brent crude futures last above $108 a barrel, after US President Donald Trump rejected a peace deal with Iran. Currently, markets see a 70% chance of a quarter-point rate hike from the Fed at the October meeting, LSEG data shows, after the central bank raised its interest rate at the September meeting. Traders are almost fully pricing in four quarter-point hikes during the next 12 months. his creates asymmetry for the dollar as another strong set of data would reinforce the case for further Fed tightening, which is largely priced in, but even a modest disappointment could trigger profit-taking following the dollar's recent rally. The yen rose as much as 0.4% to 156.51 per dollar after Japan's top currency diplomat Atsushi Mimura said on Monday that markets should take at face value the "very clear" message Tokyo and Washington delivered last week on the yen. Japan's yen was last 0.2% stronger at 157.02 per dollar. www.eforexindia.com......