Non-deliverable forwards indicate rupee will open marginally higher to the U.S. dollar, from 83.51 in the previous session.
The rupee has been holding a narrow range in recent days, circling the 83.50 handle. A handful of traders reckon that the Reserve Bank of India has been lining up dollar offers on the interbank order matching system to prevent the rupee from slipping to an all-time low of 83.5750.
"I can understand that because of the RBI that upside (on USD/INR) beyond 83.50 is difficult. However, how is that the dips too are practically non-existent," a forex trader at a bank said.
"It will be one more day of nothing,"
The 10-year U.S. Treasury yield was down to 4.44% and the dollar index slipped below 105 before the U.S. consumer inflation data. Economists polled by Reuters expect the core consumer price index to rise 0.3% month-on-month in April.
U.S. equities advanced on Tuesday and futures on the S&P 500 Index were up in Asia.
Ahead of the consumer inflation print, data showed U.S. producer prices increased more than expected in April. However, the March print was revised to show a 0.1% decline against a 0.2% increase.
Fed Chair Jerome Powell said the April producer prices report was more "mixed" than "hot," considering that prior data was revised lower while the April's data came in higher than expected.
U.S. consumer inflation figures will tell us whether the country has taken further steps in the disinflation process, or if prices remain too sticky for the Fed to cut, ING Bank said.
"The latter seems more likely."
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