MUMBAI, May 31 (Reuters) - Indian rupee premiums are expected to continue to fall, thanks to the surge in U.S. yields, unless the Reserve Bank of India intervenes and conducts sell/buy swaps, three bankers said.

The implied yield on the dollar/rupee 1-year forward premium plunged to 1.73% on Tuesday. The yield, which hit a low of 1.60% last year, was down more than 50 basis points in May.

"The move is predominantly driven by U.S. rates over the last two weeks," Ashutosh Tikekar, head of global markets at BNP Paribas India, said.

"We could see a knee jerk reaction to 1.6% on the 1-year if we see a further up-move (in short-maturity U.S. yields)."

Low premiums discourage exporters to hedge future foreign exchange receipts, bringing down the supply of dollars, while providing an incentive for importers to hedge, leading to higher demand for dollars.

This makes the RBI's job of managing the rupee exchange rate more challenging, a senior trader at a private sector bank, who did not want to be named because he is not allowed to speak to media, said.

The rupee declined to 82.85 last week, just about 0.6% away from record low.

"The RBI will not allow premiums to remain depressed, despite interest rate differentials justifying it," a proprietary trader at another bank, who did not want to be named because of internal policies, said.

"And the way I see it, the RBI intervening is the only way premiums can move higher."

The RBI can push premiums higher by conducting USD/INR sell/buy swaps. Last year, when the 1-year premium had dropped to 1.60%, the central bank had done these swaps aggressively via public sector banks, according to several traders.

BNP's Tikekar reckons RBI's intervention in swaps will be contingent on factors other than the level of forward premiums.

"RBI has used fx forwards for sterilization and liquidity management and they will continue to be guided by the same principal rather than just targeting forward levels," Tikekar said.

Near-maturity U.S. yields have surged in wake of investors pricing in a higher probability of a Fed rate hike next week and reassessing the likelihood of rate cuts this year. Odds of rate hike next week have risen to 2-in-3.

The 1-year U.S. yield is hovering near 5.30%, the highest level since 2001. Meanwhile, the 364-day India Treasury bill yield is near 6.90%.

(Reporting by Nimesh Vora; Editing by Nivedita Bhattacharjee)