MUMBAI (Reuters) - The Indian rupee was little changed on Tuesday, tracking subdued moves in its Asian peers, with traders expecting the local currency to trade with a slight depreciation bias heading into the U.S. Federal Reserve's policy decision.
The rupee was at 83.49 against the U.S. dollar as of 10:15 a.m. IST, barely changed from its previous close at 83.47.
The domestic currency logged its sharpest intra-day fall in more than two weeks on Monday, pressured by dollar demand from importers and a government debt outflow, traders said.
The rupee "should move below 83.50" on Tuesday but how far it falls will depend on whether the central bank steps in to cap losses, a foreign exchange trader at a state-run bank said.
The dollar index was up 0.1% at 105.8, while most Asian currencies were rangebound. U.S. bond yields dipped on Monday, with the 10-year Treasury yield down 5 bps at 4.60%.
The Japanese yen was down about 0.3% at 156.76 after recovering from a 34-year low hit on Monday, aided by suspected yen-buying intervention by Japanese authorities.
The Fed will deliver its policy decision on Wednesday and while it is widely expected to keep rates unchanged, investors will pay attention to remarks from Chair Jerome Powell for cues on policymakers' thinking about the future path of policy rates.
Stronger-than-expected inflation and economic activity data have prompted a sharp pullback in the chances of deep rate cuts by the U.S. central bank.
A "hawkish outlook" from the Fed may push the rupee into a weaker range between 83.40 and 83.70, Gaurang Somaiya, a foreign exchange research analyst at Motilal Oswal Financial Services, said.
(Reporting by Jaspreet Kalra; Editing by Sohini Goswami)
By Jaspreet Kalra
