MUMBAI - The Indian rupee was marginally higher on Friday, helped by the Chinese yuan-lead recovery in Asia FX and the dollar index's pullback.

The rupee was at 82.6925 to the U.S. dollar as of 10:30 a.m. IST, up from 82.74 in the previous session.

The offshore Chinese yuan rose to 7.0688 to the dollar after having reached almost 7.10 earlier in the session on possible intervention. China's major state-owned banks were seen selling dollars in the onshore spot foreign exchange market from Thursday and into Friday.

"Yes, the yuan is helping (the rupee), but there is not much in it. Volumes are nothing to write about and there is little trading interest," a spot trader said.

The rupee, after having seen a relatively quick drop from 81.60, has found support near the 82.80 levels. Expectations of the central bank keeping a lid on the rupee's losses alongside dollar inflows have lent support to the rupee in recent sessions, according to traders.

The yuan's recovery helped its Asian peers move higher, while pulling the dollar index to 104.08. The dollar index overnight reached an over two-month high of 104.30.

Still, traders reckon the dollar's downside looks capped in the wake of the jump in U.S. yields. The two-year U.S. yields climbed above 4.50% for the first time since March on the back of data that indicated that the U.S. economy was holding up well to the Federal Reserve's rate hike cycle.

Tracking the jump in U.S. yields, rupee forward premiums dropped. The one-year implied yield fell to 1.90%, the lowest since Dec 2022.

U.S. April core PCE data due later in the day could potentially have an impact on U.S. bond yields and rupee premiums.

(Reporting by Nimesh Vora; Editing by Sonia Cheema)