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The Indian rupee is expected to open higher against the dollar on Wednesday after oil prices plunged by the most in three months on concerns over demand.

The rupee is likely to open at 82.80-82.82, compared with 82.88 in the previous session.

On the interbank order matching system, the rupee had fallen to 83.0650 after regular over-the-counter trading hours on Tuesday, and the 1-month USD/INR non-deliverable forward had climbed to near 83.20.

It would not have been a surprise had the rupee opened well below 83, building on yesterday's momentum, a trader at a Mumbai-based bank said.

Oil prices have saved the day for the rupee, just as the central bank did on Tuesday, the trader said.

The Reserve Bank of India was suspected of selling dollars via public sector banks in the previous session to prevent the rupee from falling below the 83 level, according to traders.

Brent crude futures plunged 4.4% overnight, weighed down by concerns over demand out of China and the weak economic outlook. [O/R]

A fall in oil prices helps elevate concerns over India's elevated current account deficit as the country is a large importer of oil.

India's current account deficit is likely to be at around 3.4% of GDP this fiscal year, HSBC estimates. If oil prices fall by $10, the deficit could narrow to 3% next fiscal, per HSBC.

The rupee's Asian peers were mixed on the day, while the dollar index pulled back following Tuesday's jump.

The minutes of the Federal Reserve December meeting, due during U.S. trading hours, will be parsed for cues on where interest rates are headed. Further, comments from Fed officials scheduled to give speeches this week could support the dollar.

"The Fed outlook looms at the start of the year," DBS Group Research said. "Fed speakers return this week to remind markets that the battle against inflation will continue into 2023.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 82.94; onshore one-month forward premium at 12.75 paise

** USD/INR NSE Dec futures settled at 83.1175 on Tuesday

** USD/INR Dec forward premium at 10.0 paise

** Dollar index down at 104.48

** Brent crude futures at $82.2 per barrel

** Ten-year U.S. note yield at 3.73%

** SGX Nifty nearest-month futures down 0.3% at 18,257

** As per NSDL data, foreign investors bought a net $201.1 million worth of Indian shares on Jan. 2

** NSDL data shows foreign investors sold a net $0.7 million worth of Indian bonds on Jan. 2