MUMBAI, Oct 28 (Reuters) - The Indian rupee should drop to new three-week lows on Wednesday as lower regional stocks raise concerns of a drop in the domestic share market which could prompt foreign investors to withdraw some investments.
* The Morgan Stanley index of Asian stocks .MIAPJ0000PUS ex-Japan was down 1.5 percent while the Nifty India stock futures SINc1 traded in Singapore were 0.3 percent lower, both pointing to a lower opening to the local market.
* Most Asian currencies were lower compared to the dollar. For a snapshot see [EMRG/FRX]. Gains in the dollar versus major units was also expected to hurt the rupee.
* The dollar held gains against a basket of currencies on Wednesday while the yen rose as investors trimmed stretched pro-risk positions in higher yielding currencies as stocks fell on weaker than expected U.S. data.
* The partially convertible rupee INR=IN tracked domestic shares to end weaker at 46.88/90 per dollar on Tuesday from a previous close of 46.645/655.
* India's central bank laid the groundwork on Tuesday for a rise in interest rates by tightening credit to the commercial property sector, lifting its inflation forecast and warning of the threat of asset price bubbles. [ID:nDEL485971]
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