MUMBAI, Jan 24 (Reuters) - The Indian rupee declined against the dollar on Tuesday, prompted by speculators and corporates squaring positions on expectations that the local currency's upside is likely capped, traders said.
The rupee was quoting at 81.6250 per U.S. dollar by 10:50 a.m IST, compared with 81.39 in the previous session.
The local currency had reached near 80.90 in Monday, before reversing course on likely intervention by the Reserve Bank of India.
The unexpectedly quick reversal is leading to both speculators and corporates having a re-look at their positions, said a trader at a Mumbai-based bank said.
Any expectations that the rupee could be poised for a bigger move upwards have faded for now at least, he added.
The "Upside for the rupee is capped by RBI intervention and higher crude oil prices," Mecklai Financial said in a note.
While dollar inflows may help to press the USD/INR pair lower, the RBI will be there to ensure rupee does not appreciative significantly, it said.
It pointed to potential dollar inflows from the Adani Enterprises follow-on public offering that opens this Friday.
The rupee's Asian peers were mixed on Tuesday, with the Indonesian rupiah rallying and the offshore Chinese yuan slightly lower. The dollar index was marginally lower, hovering near 102.
The U.S. Federal Reserve rate decision is due next week, with the central bank widely expected to opt for a 25-basis-points rate hike. Softer-than-expected U.S. inflation readings alongside weak data have prompted traders to revisit the Fed expectations. (Reporting by Nimesh Vora; Editing by Savio D'Souza)
