The Indian rupee is set to open weaker today, tracking declines in the offshore Chinese yuan and other regional currencies. The yuan fell 0.5% to 7.2350 per U.S. dollar, influenced by soft economic data and a tighter central bank fixing from the People's Bank of China. This movement has led to increased USD/INR buying interest within the 84-84.25 range, with the rupee projected to start trading at 84.40-84.42 against the dollar, compared to 84.25 in the previous session.

The yuan's decline is attributed to weaker-than-expected services activity in China, which expanded at the slowest pace in seven months in April, dampened by uncertainty caused by U.S. tariffs. This slowdown has affected demand for the yuan and contributed to the broader weakness in Asian currencies, including the Malaysian ringgit, Indonesian rupiah, and Taiwanese dollar.

Despite previous optimism over potential trade negotiations between the U.S. and nations like China, India, South Korea, and Japan, currency sentiment has turned cautious. The Reserve Bank of India had previously intervened to curb rupee appreciation when it reached 83.77 last Friday. Analysts suggest that the rupee remains sensitive to fluctuations in Asian currencies, particularly the yuan.

Investors are closely monitoring these developments, as the rupee's performance amidst regional currency weakness could have implications for India's trade balance and foreign investment flows.