MUMBAI, Dec 16 Reuters The Indian rupee weakened slightly on Monday, tracking weakness in regional peers, while the dollarrupee overnight swap rate jumped on the back of cash dollar inflows and tight rupee liquidity, pushing up the implied rupee yield on overnight swaps above 10.

The rupee was at 84.8250 as of 1000 a.m. IST, down 0.04 from its close at 84.7875 on Friday.

Asian currencies were mostly weaker on the day, with the offshore Chinese yuan down 0.1 after data showed that retail sales in the country were weaker than expected in November. The dollar index was little changed at 106.8.

Meanwhile, the dollarrupee overnight swap rate extended its ongoing climb and rose to 1.20 paisa, pushing up the implied rupee yield on overnight FX swaps above 10.

Cash dollar inflows, alongside tight INR and flush USD liquidity in the banking system, on the back of recent spot dollar sales by the central bank, prompted the rise in the overnight swap rate, traders said.

Dollarrupee far forward premiums slipped, with the oneyear implied yield down 2 basis points at 2.16, pressured by a rise in U.S. bond yields ahead of the closely watched Federal Reserve policy decision later this week.

The oneyear U.S. Treasury yield was up 4 basis points at 4.28.

The U.S. central bank is widely expected to cut rates, with investors watching out for any hawkish revisions to policymakers39; future interest rate projections.

The odds of a 25basis point rate cut by the Fed are currently at 95,…