MUMBAI, May 23 (Reuters) - The Indian rupee was little changed near three-month lows on Tuesday as bullish bets on the greenback weighed but expectations that the central bank will step in to sell dollars to prevent a further sharp depreciation held it in a tight band.
The rupee was last at 82.81 to the U.S. dollar as of 11:03 a.m. IST, against 82.8275 in the previous session. The currency hit a low of 82.85 on Monday, its lowest since Feb. 27.
The U.S. dollar index stood firm near 103.26, after rallying nearly 2% in the past two weeks.
"A stronger U.S. dollar abroad should keep USD/INR under upward pressure," said Anindya Banerjee, head of research - FX and interest rates at Kotak Securities.
However, the central bank is expected to be active as levels are nearing the 83.00/83.25 zone, where they have historically been sellers, Banerjee said.
The dollar rose after U.S. Federal Reserve officials struck a hawkish tone overnight. Minneapolis Fed President Neel Kashkari said it was a "close call" whether he would vote to raise interest rates or pause at next month's meeting.
Meanwhile, St. Louis Fed President James Bullard said the U.S. central bank may still need to raise the benchmark interest rate by another half point this year.
The unwinding of dovish Fed expectations lent support to the U.S. dollar, OCBC analysts said in a note.
But a Fed pause or nearing the end of the tightening cycle may imply limited room for the dollar's upside if inflation data continues to surprise to the downside, the OCBC analysts said.
Meanwhile, markets continued to look for developments on the U.S. debt ceiling impasse. (Reporting by Nallur Sethuraman in Mumbai; Editing by Sohini Goswami)
