MUMBAI, March 23 (Reuters) - The Indian rupee weakened after opening stronger on Wednesday, as importers rushed in to buy dollars while a drop in the domestic share market also weighed on investor sentiment.
Most emerging Asian stock markets rose as investors exited bonds on hawkish central bank prospects, while currencies came under pressure from a stronger U.S. dollar and uncertainties about the Ukraine conflict.
The partially convertible Indian rupee was trading at 76.21/22 per dollar, compared with its previous close of 76.1750, after earlier having risen to a session high of 75.99.
"Importers came into the market after the initial fall in the dollar-rupee, but should hold in the current range for the day," said a senior trader at a state-run bank.
Oil prices rose as a reported drop in U.S. crude inventories increased concerns about tight global supplies amid the hit to Russian exports from economic sanctions.
India imports more than 80% of its oil requirements and a rise in global crude prices can push up the country's trade deficit and hurt the rupee.
The benchmark 10-year bond yield , however, was largely steady at 6.82%, down 1 basis point on the day despite a sharp rise in U.S. treasury yields following the Federal Reserve chairman's hawkish comments.
"Volumes are low here as supply will only come next month. We could see yields holding in a tight range until then unless there is a really major trigger," said a senior trader at a private bank, referring to the Indian debt market.
The government is scheduled to borrow a record $14.31 trillion from the market in the new fiscal year starting April 1.
Fed Chairman Jerome Powell on Monday delivered his most muscular message to date on his battle with too-high inflation, saying the central bank must move "expeditiously" to raise rates and possibly "more aggressively" to keep an upward price spiral from getting entrenched.
Investors in India are likely to focus more on the central bank's upcoming monetary policy review and the governor's statement for firming views about the monetary policy outlook.
"Exporters are suggested to cover only confirmed positions. For any extra covers based on expectation, we suggest keeping stop-loss of 75.80 till the panic subsides," forex consultancy firm IFA Global said in a note.
"Importers cover through options or on dips. The 3-month range for USDINR is 74.00–77.00 and the 6-month range is 73.80–77.30."
Reporting by Swati Bhat; Editing by Subhranshu Sahu