The rupee is expected to open at around 82.20-82.25 per dollar, up from 82.35 in the previous session, when it traded in a roughly six-paisa range.

"We reckon that after the opening dip (on USD/INR), we will probably have another quiet session, like yesterday, or the dollar drifts higher back to the 82.40 level," a trader at a Mumbai-based bank said.

The chances of the rupee adding to its opening advance "are quite low" given the likelihood of decent dollar buy orders at around 82.10-82.15, the dealer said.

The rupee in recent sessions has repeatedly struggled to breach that level.

The dollar index plunged 1% on Monday to just above the 112 level. The gauge's slide came alongside a 2.7% rally in U.S. equities, with the fall in U.K. yields boosting demand for risk assets.

The U.K. 30-year bond yield plunged around 44 basis points to 4.335% after Britain's new finance minister Jeremy Hunt scrapped Prime Minister Liz Truss's proposed tax cuts and reined in her energy subsidies. Hunt's reversal came after a dramatic loss of investor confidence in U.K. assets.

Despite the overnight decline in the dollar index and the risk-on sentiment, Asian currencies were mostly either flat or lower. The measured response of U.S. bonds to the fall in U.K. bonds likely impacted demand for Asian currencies.

The 10-year Treasury yield was hovering just around 4% and the 2-year was at 4.44%.

Meanwhile, in its monthly bulletin published on Monday, the Reserve Bank of India said retail inflation is set to ease from September levels, while economic activity is poised to expand.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.46; onshore one-month forward premium at 22.75 paise

** USD/INR NSE Oct. futures settled at 82.42 on Monday

** USD/INR forward premium for October at 7 paise

** Dollar index at 112.18

** Brent crude futures down 0.2% at $91.4 per barrel

** Ten-year U.S. note yield at 4%

** SGX Nifty nearest-month futures up 0.9% at 17,464

** As per NSDL data, foreign investors sold a net $62.5 million worth of Indian shares on Oct. 14 ** NSDL data shows foreign investors sold a net $74.4 million worth of Indian bonds on Oct. 14

(Reporting by Nimesh Vora; Editing by Savio D'Souza)

By Nimesh Vora and Anushka Trivedi