The 10-year U.S. yield declined about 8 basis points on Friday, while U.S. equities plunged. The Indian rupee is likely to inch up at open on Monday, boosted by the drop in the dollar and U.S. Treasury yields after economic data fuelled worries over the U.S. growth outlook.

The 1-month non-deliverable forward indicated that the rupee will open at 86.60-86.64 to the U.S. dollar compared with 86.7125 in the previous session.

U.S. business activity nearly stalled in February amid mounting fears over tariffs on imports and cuts in federal spending, data released on Friday showed. Separately, data revealed that U.S. consumer sentiment dropped more than expected to a 15-month low and inflation expectations rocketed.

"Expectations for future activity weakened, while longer-run inflation expectations are at risk of becoming de-anchored. That was the clear message from the subset of soft U.S. economic surveys," ANZ Bank said in a note.

The 10-year U.S. yield declined about 8 basis points on Friday, while U.S. equities plunged. The dollar index dropped to 106.16 - the lowest since mid-December - in Asia trading on Monday.

Meanwhile, the euro rose against the U.S. dollar following the results of Germany's elections. Asian currencies were mostly higher.

The rupee "probably will not do much" after the opening up move based on the weaker dollar, a currency trader at a bank said.

The rupee last week was in an 86.4750-86.98 range. The trader reckons that the range will "broadly hold up" this week.

The Reserve Bank of India will conduct a longer duration dollar/rupee buy/sell swap to infuse durable liquidity into the banking system next week, the central bank said on Friday.

The dollar/rupee forward premiums are expected to soften post RBI's swap. This is the second swap auction by the central bank in a month.