By Anushka Trivedi
MUMBAI (Reuters) - The Indian rupee was expected to open little changed to the U.S. currency on Wednesday amid a spike in U.S. yields and a flat dollar.
The rupee is seen around 82.75-82.80 per dollar in early trades versus its previous close of 82.8475.
The currency may even gain marginally at the open, tracking a subdued dollar, absent any fresh cues, with China's steps towards reopening a positive in the background, said a foreign exchange trader.
However, an uptick in U.S. yields could put some pressure, the dealer added, while citing limited trading activity around the holidays.
The dollar index was flat at 104.250 after China said on Monday it would scrap its COVID-19 quarantine rule for inbound travellers, even as COVID cases spike.
The rising cases are a risk, but economic reopening is eventually needed and could spur activity in China, said Sajal Gupta, head of forex and rates at Edelweiss Financial Securities.
Asian shares were surrendering Tuesday's gains, tracking a fall in U.S. stocks as investors were divided over China's policy shift, while most Asian currencies declined.
Oil prices remained firm at around $84.40 in another threat to the rupee. [O/R]
Coming off a holiday, benchmark U.S. Treasury yields rose over 10 basis points overnight to hover near a five-week high of 3.86%, as investors continued to assess the Federal Reserve's path for interest rates.
After a near three-month low, the 10-year yield has steadily climbed, with global central bank policy announcements prompting large gains till last week.
** One-month non-deliverable rupee forward at 82.94; onshore one-month forward premium at 15 paise
** USD/INR NSE Dec futures settled on Tuesday at 82.8575
** USD/INR Dec forward premium as of Dec. 27 for end current month is 0.3 paise
** Dollar index at 104.24
** Brent crude futures at $84.4 per barrel
** Ten-year U.S. note yield at 3.84%
** SGX Nifty nearest-month futures down 0.5% at 18,065
** As per NSDL data, foreign investors bought a net $28.6 mln worth of Indian shares on Dec. 26
** NSDL data shows foreign investors bought a net $65.7 mln worth of Indian bonds on Dec. 26
(Reporting by Anushka Trivedi; Editing by Savio D'Souza)