MUMBAI: The Indian rupee fell on Tuesday likely on the back of dollar outflows by a large foreign bank and pressured by the rise in U.S. yields, traders said.

The rupee was quoted at 81.9250 per U.S. dollar by 10:54 a.m. IST, down from 81.7950 in the previous session.

A large U.S.-based bank is mainly on the bid (on USD/INR), a spot trader at a public sector bank said. It was, in all likelihood, related to one-off dollar outflow, he said.

Indian Rupee ends little changed on likely dollar buying by RBI

Possible exhaustion of dollar short positions in the wake of the Reserve Bank of India’s intervention may be another reason, the trader added.

Other Asian currencies were mostly lower in the wake of the overnight rise in U.S. yields. The two-year U.S. yield climbed back to near 4% ahead of the U.S. inflation data due Wednesday. The dollar index was marginally higher at 101.48.

The inflation print comes after the Federal Reserve last week signalled a pause contingent on how economic data evolves and in the backdrop of investors pricing in rate cuts from September onwards.

“(A) Stronger (inflation) print could push back market’s dovish expectations and that would pose upward risk to the U.S. dollar,” OCBC analysts said in a note.

Tracking the rise in U.S. yields, rupee forward premiums fell. The 1-year implied USD/INR yield dropped to 2.17%.

“There is good receiving interest from the trading perspective. Spot at near 82 provides an added excuse,” the trader said.