Rupee edges lower towards 82/USD as Asian currencies drop

A customer hands a 50-Indian rupee note to an attendant at a fuel station in Ahmedabad

By Anushka Trivedi

MUMBAI (Reuters) - The Indian rupee weakened on Tuesday, slipping back towards the 82 per dollar mark, as the greenback broadly rebounded and Asian currencies weakened.

The rupee was trading at 81.84 per dollar by 9:37 a.m. IST, compared to its previous close of 81.6125.

The currency saw its worst session in a month on Monday, when traders cited heavy dollar buying by state-run banks and stop-losses being hit to take the rupee to near 81.75-levels from sharp opening gains.

The dollar purchases were suspected to be on the Reserve Bank of India's behalf, so the currency's near-term resistance is likely going to be 81.20-81.30, said a trader at a private bank.

"Exporters are advised to increase their hedge on the break of 81.90 levels, while importers are advised to increase their hedges on the break of 81.60 levels," said Ritesh Bhansali, vice-president at Mecklai Financial Services.

Most of Asian emerging market currencies and stocks were lower, with the yuan extending losses with a 0.4% drop.

The Chinese currency fell despite industrial output, retail sales and economic growth data all beating expectations, underlining the toll exacted by a stringent "zero-COVID" policy.

The dollar index edged higher to 102.400-levels, after hitting a seven-month low in the previous session.

The market focus will be on U.S. retail sales, industrial production and producer prices this week to further gauge whether the economy was feeling the effects of the Federal Reserve's interest rate hikes.

Fed fund futures currently show markets have priced in a 88% probability of a 25 basis point (bps) increase on Feb. 1. That compares to the 50 bps hike it delivered in December and four 75-bp hikes prior to that.

(Reporting by Anushka Trivedi; Editing by Rashmi Aich)