MUMBAI: The Indian rupee is expected to open weaker on Tuesday, as the Federal Reserve rate outlook dampened demand for risky assets and boosted the dollar.

The rupee is seen around 82.40-82.45 in early trades, down from 82.32 in the previous session.

On Monday, the local unit had dropped to a record low of 82.6825, but recouped losses to end flat due to likely intervention from the Reserve Bank of India (RBI).

Still, traders reckoned that the rupee’s downtrend remained intact.

The market is “still searching for a floor” for the rupee and it looks like “we are not there yet”, a Mumbai-based trader said.

“If the RBI does not intervene…then traders will remain long on USD/INR pair throughout the day”, said Ashish Ranade, forex and treasury chief manager at Cosmos Bank.

Asian currencies slipped on Tuesday and the dollar index inched higher to 113.22, heading for its fifth daily advance. The offshore Chinese yuan dropped to 7.1840 to the dollar. The US 10-year yield was seen hovering near to 4%.

The likelihood of more large Fed rate hikes was lifting Treasury yields and supporting demand for the dollar.

Indian rupee poised for another record low on Fed rate, oil worries

Chicago Fed president Charles Evans said on Monday that he sees the policy rate needing to rise “a bit above” 4.5% by early next year and remaining there, as the US central bank takes stock.

The Fed rate is currently at 3%-3.25% and markets are factoring in that its more than likely that the US central bank will take it to 3.75%-4% next month.

The US inflation data due on Thursday will be key in gauging the outlook for rates at the November and December meeting.

Meanwhile, oil prices, among the reasons that the rupee has struggled, cooled off slightly. Brent crude was hovering near $96 a barrel, having climbed to $98.75 intraday on Monday.

Asian shares fell and US equity futures extended losses. Geopolitical concerns heated up after a Russian missile attack on Ukraine killed civilians and knocked out power in cites across the country.