MUMBAI: The Indian rupee declined against the dollar on Tuesday, tracking a broad decline in Asian currencies led by the Chinese yuan.

The rupee last traded at 81.76 to the dollar, down from 81.6125 in the previous session, and adding to its drop on Monday.

“We can safely say that the rupee’s recovery phase is over for the moment and its renewal will need a new trigger,” a spot trader at a private sector bank said, adding that any further prompts were unlikely to come before Feb. 1, when India’s budget proposal is presented and the Fed’s policy meeting takes place.

“For speculators who are holding on to their dollar short positions, today’s price action was quite discouraging,” he added.

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The rupee’s decline on Monday and Tuesday comes on the back of last week’s surge that lead to importers stepping up their hedges.

“We expect USD/INR to find resistance near the 81.75-82.00 zone, when exporters could be attracted to participate and sell long-term forwards,” Amit Pabari, managing director at CR Forex, said.

Asian currencies struggled on Tuesday, stepping back following a recent rally. The offshore Chinese yuan dropped 0.6% to below 6.78 to the dollar after having rallied to a six-month high in the previous session.

The yuan’s slide came amid data that showed China’s economic growth in 2022 slumped to one of its worst levels in nearly half a century. The fourth quarter was hit hard by coronavirus curbs and a property market slump.

Still, the outlook for Asian currencies broadly has improved on the back of the relief on the U.S. inflation and the implications it has for the U.S. Federal Reserve policy.

Markets have priced in a 25 basis points rate increase at its next meeting, and economists are betting on another increase of the same size in March.