Non-deliverable forwards indicate rupee will open 83.52-83.54 to the U.S. dollar compared with 83.45 in the previous session.

The local currency just about managed to avoid the 83.4550 record low on Monday on likely intervention by the Reserve Bank of India.

"In terms of level, I reckon 83.50 is in a way psychologically important," an fx trader at a bank said. "You would expect RBI to be there at open to just sort of comfort a nervous market."

Asian currencies and equities extended losses, the dollar index was up, and oil prices rose. Lingering worries that Israel will respond to Iran's attack over the weekend and the likelihood of the Fed delaying rate cuts sapped risk appetite, boosting demand for the safe-haven dollar.

Israel's Prime Minister Benjamin Netanyahu summoned his war cabinet for the second time in less than 24 hours on Monday to weigh a response to Iran's attack.

The S&P 500 Index dropped to its lowest in nearly two months.

Risk appetite was further marred by the more-than-expected increase in U.S. retail sales, indicating that the economy remained robust and the Fed will wait longer to cut interest rates. The 10-year U.S. Treasury yield reached 4.66%, the highest since mid-November.

Risk aversion will weigh on the emerging Asian currencies, DBS Bank said in a note. The Indonesian rupiah plunged more than 2% and the Korean won was down 1%.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.60; onshore one-month forward premium at 7 paisa ** Dollar index up at 106.38 ** Brent crude futures up 0.6% at $90.7 per barrel ** Ten-year U.S. note yield at 4.62% ** As per NSDL data, foreign investors sold a net $952.1 million worth of Indian shares on Apr. 12

** NSDL data shows foreign investors sold a net $211.8 million worth of Indian bonds on Apr. 12

(Reporting by Nimesh Vora; Editing by Janane Venkatraman)

By Nimesh Vora