The Indian rupee rose against the U.S. currency on Monday in line with its Asian peers, but was off its opening highs on dollar demand from importers and speculators.

The rupee was at 81.90 to the dollar at 11:12 a.m. IST compared with 82.04 in the previous session.

The local currency had opened at 81.76, tracking the dollar's all-round slump on bets the U.S. Federal Reserve will adopt a less hawkish stance at its next meeting.

After the open, the rupee ran into normal dollar demand that we usually see on dips (on USD/INR), a trader at a private sector bank said.

Plus, it could be that the likely increase in volatility is prompting speculators to exit dollar short positions, he added.

The dollar index declined below 104 while Asian currencies such as the Korean won and the Thai baht jumped more than 1%. The slump in near-maturity U.S. yields fuelled the selloff on the dollar.

The two-year U.S. yield added to its Friday tumble to slip to nearly 4.35%, the lowest level in a month. Investors are betting that the crisis at Silicon Valley Bank (SVB) will force the Fed to opt for a smaller rate hike at this month's meeting.

There is now a high likelihood that the Fed will deliver a 25-bps rate hike in March, futures pricing shows.

"Fed funds futures rate expectations have already shifted markedly – not only do markets now see a lower peak, but rate cuts later this year are back on the menu," Capital Economics said in a note.

The U.S. central bank, alongside the U.S. Treasury, took steps to contain the fallout from SVB's collapse. U.S. equity futures surged, further undermining demand for the dollar.

The rupee forward premiums jumped, tracking the fall in U.S. yields. (Reporting by Nimesh Vora; Editing by Janane Venkatraman)