The rupee is trading lower at Rs 61.96/97 on Monday from its close of Rs 61.92 on Friday ahead of the interim budget presentation due to start at 11 am.
Dealers largely expect finance minister P. Chidambaram to stick to his fiscal deficit aim of 4.8% this FY; will also look at market borrowing numbers for FY15.
"Big expenditure numbers will be negative for the rupee," says a dealer with a state-run bank.
Traders will also watch domestic stock and debt markets for clues on the direction of foreign fund flows.
Most Asian share markets edged higher on Monday in a nod to the resilience of Wall Street, but Japanese stocks struggled with both a stronger yen and a surprisingly weak reading on economic growth.
Local shares up 0.5%.