The rupee was at 83.4925 against the U.S. dollar as of 09:50 a.m. IST, down 0.1% from its close at 83.3725 on Friday.
Stronger than expected U.S. labour market data boosted the dollar and U.S. bond yields as odds of September rate cut fell below 50%, according to CME's FedWatch tool.
The dollar index was up 0.2% at 105.3, adding to Friday's gains, while the Korean won led losses in Asian currencies with a 0.9% fall.
Expect the dollar-rupee pair to be "overall biddish due to trimmed rate cute expectations," but the range continues to be 83.35-83.60, a foreign exchange salesperson at a large private bank said.
Dollar-rupee far forward premiums also dropped with the 1-year implied yield down 3 basis points at 1.58%, its lowest in over two months, pressured by a rise in U.S. bond yields.
The 1-year U.S. Treasury yield ticked higher to 5.20% in Asia hours after rising 9 basis points on Friday.
"Asia FX could face volatility amid the rise in U.S. yields," Lloyd Chan, senior currency analyst at MUFG Bank said in a note.
Meanwhile, benchmark Indian equity indexes, the BSE Sensex and Nifty 50, hit record highs in early trading before paring gains to trade little changed on the day.
The focus this week will be on local and U.S. inflation data alongside the Fed's policy decision on Wednesday. With the U.S. central bank expected to keep rates unchanged, investors will pay attention to Chair Jerome Powell's commentary and any updates to the interest rate dot plot.
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