Drop in oil prices, US yields to lift rupee to near 83/dollar

MUMBAI, Oct 25 (Reuters) - The Indian rupee is expected to climb on Wednesday following a further decline in oil prices on worries over demand and a pullback in U.S. Treasury yields.

Non-deliverable forwards indicate the rupee , resuming trade after Tuesdays holiday, will open at around 83.00-83.02 to the U.S. dollar, compared with 83.1925 in the previous session.

\“You would have to expect that the dip (in USD/INR) would find buyers,\” a forex trader at a bank said.

\“Todays price action will be interesting, in that we will come to know how decently dips will be received. The RBI (Reserve Bank of India) will remain the biggest factor.\”

The RBI has been supporting the rupee for several sessions, and the intervention has been particularly aggressive in recent days.

Brent crude inched lower in Asia to close to $88 a barrel and is down more than 6% from last weeks highs. Concerns over demand in the wake of weak euro zone data and diplomatic efforts to contain the Middle East conflict have dented the demand for oil.

The 10-year U.S. yield cooled off following the recent run-up to multi-year highs, last at 4.82%, which is 20 basis points off Fridays highs. Hedge fund manager Bill Ackman saying he was abandoning short bets on Treasuries accelerated the fall in the yields.

The dollar index was near 106.20.

External pressures on Asia \“are easing this week\” with 10-year U.S. yields and oil prices retracting lower and dollar index \“uptrend seem to be pausing\”, DBS said in a note.