The rupee was at 82.47 against the dollar by 11:30 a.m. IST, staying near a key resistance level of 82.50, compared to its previous close of 82.5525.
On Sunday, UBS Group AG sealed a deal to buy Credit Suisse for 3 billion francs ($3.24 billion), a merger engineered by Swiss authorities, which was followed by global central banks assuring markets of adequate dollar liquidity via standing swap lines.
This has probably helped the rupee avoid larger losses, but the currency will likely stay in a range of 82.40 and 82.70, a trader with a private bank said.
The injection of dollar liquidity has raised prospects of the Fed holding rates this week, which creates another uncertainty in a market reeling from the banking crisis, the trader added.
Shares in Singapore and Australia tumbled over 1%, while among currencies, the Indonesian rupiah and the South Korean won weakened around 0.25%.
The dollar index was little changed around 103.800.
The probability of the Fed holding rates at this week's meeting went up to nearly 60%, a reversal from largely expecting a 25 basis point (bps) hike at the end of last week.
Futures further indicate rate cuts of around 90 bps this year.
HDFC Bank economists said a pause from the Fed was a "less probable event," but if it did materialise, a cut could happen by summer and send both the dollar index and bond yields significantly lower.
The rupee forward premiums climbed, with 1-year implied yield hitting a five-month high at 2.45% on fading Fed rate hike bets.
($1 = 0.9258 Swiss francs)
(Reporting by Anushka Trivedi; Editing by Varun H K)
By Anushka Trivedi
