The rupee was likely to open at around 81.70-81.75 to the dollar compared with 81.6125 in the previous session. All major currencies dropped on Tuesday, with the offshore Chinese yuan falling to 6.75 against the dollar. The offshore yuan had briefly climbed above 6.70 on Monday.

The rupee on Monday had opened higher, but reversed course on heavy dollar-buying by public sector banks to suffer its worst session against the dollar in a month.

A few traders had said dollar purchases may have been at the Reserve Bank of India's instructions.

Based on yesterday's price action, which suggested that the rupee's upside momentum has run its course and how Asian currencies are faring, rupee will be under "a bit of pressure at the open", a trader at a Mumbai-based bank said. 

For USD/INR, 81.45 will be the new support and it will face resistance at 82.10, Kunal Sodhani, vice president at Shinhan Bank, said.

Meanwhile, the yuan's fall came despite better-than-expected GDP and spending and activity data. China's economy expanded by 2.9% year-on-year in the December quarter, better than the 1.8% economists had expected.

Further, China retail sales contracted less than estimated last month and industrial output growth topped forecasts.

For Asian currencies and shares, the next big trigger is likely to be the U.S. Federal Reserve policy decision on Feb. 1. With the U.S. central bank now widely expected to opt for a smaller 25 basis points rate hike, the key focus of investors will be on the guidance.

The dollar index inched up to 102.50, helped by the tepid risk sentiment in Asia, U.S. equity futures were marginally lower.

U.S. retail sales data, industrial output and producer price index prints are due this week.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 81.9; onshore one-month forward premium at 12.75 paise

** USD/INR January futures settled on Monday at 81.64

** USD/INR January forward premium is 4.0 paise

** Dollar index rises to 102.5

** Brent crude futures down slightly at $84.4 per barrel

** Ten-year U.S. note yield at 3.55%

** SGX Nifty nearest-month futures down 0.1% at 17,933

** As per NSDL data, foreign investors sold a net $459.2 mln worth of Indian shares on Jan. 13

** NSDL data shows foreign investors bought a net $146.8 mln worth of Indian bonds on Jan. 13

(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)

By Anushka Trivedi and Nimesh Vora