Rupee to drop on weak Asian units; policy eyed

The rupee is seen weakening early on Tuesday following a drop in most regional currencies ex-Japan with traders awaiting the sharemarket open and the Reserve Bank's quarterly monetary policy review for further cues.
                                           
* The second quarter review of Reserve Bank of India's monetary policy is due at 0545 GMT. RBI will keep its benchmark lending and borrowing rates on hold in its quarterly policy review on Tuesday, a Reuters poll showed.
                                           
* However, traders would be waiting to see if the RBI takes any action on the cash reserve ratio front. Three analysts expected the RBI to raise CRR or the proportion of deposits banks have to keep with it in reserve, by up to 50 basis points.
                                           
* The Morgan Stanley index of Asian stocks ex-Japan was down 1.2% while the Nifty India stock futures  traded in Singapore were 0.8% lower, both pointing to a lower opening to the local market.
                                           
* Most Asian currencies were lower compared to the dollar.
                                           
* The U.S. dollar held a firmer tone on Tuesday, pulling away from recent 14-month lows, as investors unwound short positions and took profits in high-yielding currencies after a sharp drop in stocks and commodities.
                                           
* The partially convertible rupee ended at 46.645/655 per dollar on Monday, off the day's peak of 46.47, and about 0.3% below Friday's close of 46.50/51.