Rupee rises to its highest in nearly three weeks at 53.93/94 versus its previous close of 54.1650/1750. Global risk assets recover a day after a bailout plan for Cyprus jolted investors.
The pair dropped to 53.9050, its lowest since February 28.
Asian shares rebounded on Tuesday from the previous session's steep falls -- although losses in safe-haven assets were limited -- as investors remained wary over a bailout plan for Cyprus set to face a parliamentary vote later in the day.
The domestic sharemarket currently trading up 0.2 percent. Most Asian currencies trading stronger compared with the dollar.
The RBI is widely expected to cut rates by at least 25 basis points later in the day. The decision is due at 11 a.m. and traders will also keenly watch the statement for near-term direction.