MUMBAI: The Indian rupee is likely to open weaker on Tuesday as U.S. treasury yields rose to fresh multi-year highs after the United States averted a partial government shutdown.

Non-deliverable forwards indicate the rupee will open at around 83.25 to the U.S. dollar compared with a close of 83.04 in Friday’s session.

Indian financial markets were closed on Monday for a public holiday.

The 10-year U.S. treasury yield rose to 4.70% on Monday, its highest level since October 2007, and was hovering close to that level in Asia.

Buoyed by higher U.S. yields, the dollar index also climbed to 107.13 in Asia, its highest level since November 2022.

U.S. Federal Reserve officials also struck a hawkish tone on Monday and signalled that the central bank most likely isn’t done raising interest rates.

“I suspect we may well need to raise the Fed funds rate once more this year and then hold it there for some time,” Federal Reserve Bank of Cleveland President Loretta Mester said.

The rupee is likely to trade with a negative bias, with traders watching for possible dollar sales from the Reserve Bank of India (RBI) to ease the pressure, a foreign exchange trader at foreign bank said.

While the rupee has come close to testing its record low levels in recent weeks, likely dollar sales from the RBI have managed to keep some of the weakness at bay. The rupee’s lifetime low of 83.29 was hit in October 2022.

Asian currencies were weaker, with the Indonesian rupiah and Thai baht leading losses. Brent crude oil futures were lower by over 1% at $89.75.

The rupee could see an intraday fall to a fresh record low if the dollar index continues to strengthen, said Dilip Parmar, a foreign exchange research analyst at HDFC Securities.