MUMBAI, Aug 22 Reuters The Indian rupee rose slightly on Tuesday on the back of a subdued U.S. dollar, but was not expected to make a significant move higher in the wake of worries over U.S. yields.

The rupee was at 83.0650 to the U.S. dollar by 1158 a.m. IST, up from 83.1075 in the previous session.

The 10year U.S. Treasury yield rose more on Monday, reaching a multiyear high. It is now up 35 basis points bps monthtodate.

Rising U.S. yields could prompt a reevaluation of the risk appetite and makes markets vulnerable to a risk event, said Srinivas Puni, managing director at QuantArt Market Solutions.

The local currency, having dropped below 83 to the dollar last Monday, has been held in a narrow range, thanks to likely intervention by the Reserve Bank of India RBI.

While the rupee has stabilised in the current zone of 83, risks are piling up silently, waiting for a spark to ignite, Puni added.

A pullback on the dollar index and the recovery on the Chinese yuan on Monday helped the rupee. The dollar index dipped to 103.16.

The offshore yuan was above 7.30 to the dollar on bets of offshore yuan liquidity tightening. China39;s major stateowned banks were seen actively mopping up the offshore yuan on Monday.

Amid the jump in U.S. yields, investors are eyeing Federal Reserve39;s Chair Jerome Powell39;s comments later this week for cues on whether more rate hikes were possible and how long rates were likely to remain high.

Reporting by Nimesh Vora; Editing by Janane…