The Indian rupee was little changed on Wednesday, even as Asian currencies fell pressured by an uptick in Treasury yields as traders moderated bets on potential rate cuts in the U.S. this year.
The rupee was at 83.33 (Dh22.7) as of 10:15 a.m. IST, barely changed from its close at 83.3175 in the previous session.
The dollar index jumped 0.8% on Tuesday and the 10-year U.S. Treasury yield rose 8 basis points to 3.94% amid paring of expectations of interest rate cuts by the Federal Reserve.
Investors are currently pricing in a near 75% chance of a Fed rate cut in March, down from about 85% a week earlier, according to CME Group's FedWatch tool.
Asian currencies were mostly lower, with the Korean won and Malaysian ringgit leading losses down by 0.5% and 0.6%, respectively.
"There is decent selling interest (for USD/INR) near 83.35," a foreign exchange trader at a foreign bank said.
Traders don't expect to see sharp moves for the rupee on expectations that the Reserve Bank of India (RBI) will intervene to cap losses.
The RBI's two-sided intervention has kept the rupee in a tight range over the last two months.
The central bank has capped losses near the 83.40 handle while also stepping in to absorb dollar inflows which has limited gains in the local unit.
"Some weakness will be on the cards" for the rupee on Wednesday amid pressure on regional currencies, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.
Key U.S. data releases this week are also likely to impact investors' expectations, starting with the ISM Manufacturing purchasing managers' index (PMI) data due later in the day.
The minutes from the Fed's December policy meeting will also be released later on Wednesday and will offer clues on policymakers' thinking about potential easing of policy rates.
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