Non-deliverable forwards indicate the rupee will open broadly unchanged from 83.33 in the previous session.
The dollar has "suffered a further selloff", and for the rupee that just means that 83.40-83.42 "is safe", a FX trader at a bank said.
"To expect any other (effect) will be too optimistic considering the customary (dollar buy) orders we are used to."
The USD/INR has repeatedly run into buying interest on the smallest of dips over the last several sessions. Importers and dollar purchases by public sector banks have kept dips in USD/INR shallow.
The dollar index on Thursday dropped to the lowest in four months, thanks to the rally on the euro and the UK pound. The euro climbed to 1.10 to the dollar on Thursday after European Central Bank president Christine Lagarde pushed back on expectations of aggressive rate cuts.
The Bank of England too did not endorse rate cuts in 2024.
"The ECB and BoE signalled high-for-longer interest rates," ANZ said in a note.
The U.S. Federal Reserve, on the other hand, emboldened bets for rate cuts next year. The Fed's slight dovish tilt has prompted investors to price in more rate cuts than before the policy announcement.
Markets are now pricing in a 75% chance of a rate cut in March by the Fed, according to CME FedWatch tool, and a total of 150 basis points (bps) of rate cuts by Dec. 2024.
U.S. yields dropped more on Thursday with the 10-year posting a low of 3.88%. That is a near 30 bps fall from before the Fed outcome.
(Reporting by Nimesh Vora; Editing by Janane Venkatraman)
By Nimesh Vora
