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The rupee is trading at 61.53/54 versus its previous close of 61.46/47 and is off the session high of 61.35, hurt by a retreat in domestic shares with sentiment remaining cautious ahead of the Reserve Bank of India's monetary policy review on Tuesday.
The RBI will likely raise its lending rate further on Tuesday, cementing its inflation-fighting credentials despite the country's sputtering economic growth, a Reuters poll showed.
The BSE Sensex is trading largely flat after rising as much as 0.4%.
Gains in other Asian currencies are, however, expected to limit a very sharp rise in the pair.
The macro economic report to be published at 5 pm will be critical in offering some clues about Tuesday's policy review.
