The Indian rupee is likely to open little changed on Tuesday on the back of a recovery in the Chinese yuan and other Asian currencies despite a further rise in U.S. yields.
Non-deliverable forwards indicate rupee will open near Monday's level of 83.1075.
It looks like the USD/INR has settled at just above the 83 handle for now, a forex trader at Mumbai-based bank said.
"The RBI (Reserve Bank of India) is averse to it (the USD/INR) making a new high, and on the other hand, you have the volatility in (US) Treasury yields,"
The yield on the U.S. 10-year Treasury hit the highest since 2007 on Monday on bets that a resilient U.S. economy will push the Federal Reserve to keep interest rates higher for longer.
At the Fed's Jackson Hole Economic Symposium from Aug. 24 through 26, Chair Jerome Powell's comments will be scrutinized for cues on interest rates.
The Treasury sell-off is less about the terminal rate for this tightening cycle and more about where the Fed Funds rate settles under normal conditions, ING Bank said in a note.
Asian currencies managed a recovery on Tuesday, despite the U.S. Treasury yields. The offshore yuan was back below 7.30 to the dollar on bets of tightening up of offshore yuan liquidity. China's major state-owned banks were seen actively mopping up the offshore yuan on Monday
