Rupee nudges higher as dollar dips; eyes on Fed minutes

MUMBAI, Feb 20 (Reuters) - The Indian rupee inched up on Monday, tracking Asian peers as the dollar index stalled after a recent rally, with investors awaiting minutes of the Federal Reserve meeting due mid-week.

The rupee finished at 82.7225 per U.S. dollar, compared with its previous close of 82.83.

Asian currencies recovered slightly on Monday after last week's selloff, with the Thai baht and the Philippine peso gaining around 0.7% and 1%, respectively.

The dollar index backed down from a six-week peak to 103.850, dropping below a key 104 threshold. It had gained about 0.9% over the past fortnight.

Fed officials' hawkish comments, coupled with recent inflation, retail sales and jobs data in the United States, have strengthened the case for the U.S. central bank hiking rates multiple times this year, fuelling a dollar rally.

Fed funds future indicates a near-80% chance of two 25 basis point hikes at the next meetings, with a 53% probability of another similar-sized hike in June, according to the CME FedWatch tool.

Economists at Indian banks expected the country's central bank to keep intervening amid this period of volatility after data showed the RBI's forex reserves fell $8.32 billion to $566.95 billion in week-ended Feb. 10.

"We don't expect a sustained appreciation in the rupee till the Fed's rate hike path is clear," said Aditi Gupta, an economist at Bank of Baroda.

Minutes from the Fed's February meeting due on Wednesday during U.S. hours would be crucial, while a few its officials are also scheduled to speak this week.

The core personal consumption expenditure (PCE) price index data, Fed's preferred gauge for inflation, is due on Friday.