The Indian rupee is expected to weaken at open on Tuesday, pressured by the broad uptick in the U.S. dollar with the focus on the Bank of Japan's interest rate decision.

Non-deliverable forwards indicate rupee will open at around 82.94-82.96 to the U.S. dollar compared with 82.9050 in the previous session. Over the last month, the dollar/rupee pair has repeatedly struggled to climb past the 82.95-83.00 region.

"You are definitely going to see selling interest (on USD/INR) near the 83 area," a currency trader at a bank said.

"There are two big events lined up (BOJ and Federal Reserve policy reviews), either of which hold the potential for a major swing."

A fall below 83 for the rupee would mean a "windup" of the uptrend it has enjoyed for several weeks, he said

The dollar index inched up, and the Japanese yen and other Asian currencies were weaker heading into the BOJ's policy decision. The central bank could potentially exit the negative interest rate policy, a development that will impact U.S. Treasury's yields and the dollar.

"The BoJ meeting has been the subject of a frenzy of headlines, and the sheer number of articles in the local press regarding a move away from negative rates does put the proposition of a 10-basis-point hike a real risk," Chris Weston, head research at Melbourne-based broker Pepperstone said in a note.

The yen so far has not benefited from the reports and is currently at 149.30 to the U.S. dollar.

USDJPY traders are looking more intently at the Fed meeting, and potential changes in the dot plot, Weston added.

The Fed's dot plot in December had indicated three rate cuts in 2024. In the wake of the recent higher U.S. inflation readings, analysts see a risk that the new dot plot may indicate only two rate cuts.

 

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.02; onshore one-month forward premium at 7.50 paise ** Dollar index up at 103.58 ** Brent crude futures down 0.1% at $86.8 per barrel ** Ten-year U.S. note yield at 4.33%

** As per NSDL data, foreign investors bought a net $93.3mln worth of Indian shares on Mar. 15

** NSDL data shows foreign investors bought a net $115.3mln worth of Indian bonds on Mar. 15

(Reporting by Nimesh Vora; Editing by Janane Venkatraman )