Rupee inches lower as traders cover shorts; WPI eyed

Reuters Market Eye - The rupee edges lower to 53.88/89 versus its previous close of 53.82/83 as traders cover short dollar positions after a long weekend in most of Asia.

"Investors had gone short dollar ahead of the five-day weekend, so the first thing they did is cover their shorts. But sentiment is offerish on the back of positive Asian currencies, so expect USD/INR to edge down later," a senior dealer with a foreign bank said.

Traders to watch domestic share market moves for cues on the direction of fund flows during the day.

The pair broadly seen holding in a 53.70 to 53.95, dealers say.

Traders will also watch the inflation data due around 11:30 a.m. for cues on the likely interest rate outlook. A Reuters poll expects the WPI to hit a three-year low of 7 percent, at a time of uncertainty on how aggressively the RBI will cut interest rates this year.

(Reporting by Swati Bhat)