• The Indian Rupee edges higher in Tuesday’s early Asian session. 
• India’s foreign outflows and the unwinding trade in major Asian peers might continue to undermine the INR. 
• All eyes will be on the RBI interest rate decision on Thursday.

The Indian Rupee (INR) recovers on Tuesday amid the decline of the US Dollar (USD). The upside of the local currency might be limited as risk sentiment is likely to influence the markets. On Monday, the INR fell to an all-time low at the open as traders feared a looming US recession that could lead to further foreign outflows from India and other emerging markets. Additionally, the unwinding trade amid a rally in the Chinese Yuan and Japanese Yen could create a headwind for the Indian Rupee. 

Nonetheless, the expectations of deeper rate cuts by the Federal Reserve (Fed) could exert some selling pressure on the Greenback and drag the pair lower. Market participants expect the US central bank to cut its interest rate by 50 basis points (bps) in both September and November and another quarter-point cut in December. Traders will closely monitor the Reserve Bank of India (RBI) interest rate decision on Thursday. The RBI is anticipated to keep the repo rate unchanged at 6.5% due to risks from higher food inflation.