MUMBAI (Reuters) - The Indian rupee is likely to open largely unchanged on Thursday amid a decline in Asian peers and a widely held expectation that the currency will not drop below a key level.

Non-deliverable forwards indicate the rupee will open at 83.44-83.46 to the U.S. dollar, compared with 83.4550 in the previous session. The rupee hit an intraday high of 83.3350 on Wednesday before changing course.

With the "mild" rally on the currency in the wake of inflows "looking done", it was back to watching the 83.50-83.55 level, a currency trader at a bank said.

The Reserve Bank of India has broadly defended that range to keep the rupee from dipping below the 83.5750 all-time low.

"With the RBI decisive on its defence, you would think the way to play is to be short (on the dollar/rupee). And we have the index inclusion coming up."

Foreign inflows into Indian bonds will hit a decade-high of $2 billion around June 28 when they will be included in a widely tracked JPMorgan index.

Asian currencies were down on the day and the dollar inched higher against a basket of its major peers. U.S. markets were closed on Wednesday.

The outlook of Asian currencies largely centres on what happens to U.S. interest rates. Following soft inflation data and tentative signs that growth in the United States may be slowing, investors are back to pricing in two rate cuts by the Federal Reserve this year.

The odds of a September Fed rate cut have now climbed to more than 60%.

"Next week we'll get a very subdued PCE (Personal Consumption Expenditures) deflator report, and that will harden the build of a rate cut discount for September," ING Bank said in a note.

KEY INDICATORS:** One-month non-deliverable rupee forward at 83.50; onshore one-month forward premium at 7.25 paise

** Dollar index up at 105.25** Brent crude futures up 0.1% at $85.1 per barrel** Ten-year U.S. note yield at 4.25%

** As per NSDL data, foreign investors bought a net $188.8mln worth of Indian shares on June 18

** NSDL data shows foreign investors bought a net $264.5mln worth of Indian bonds on June 18

(Reporting by Nimesh Vora; Editing by Sohini Goswami)

By Nimesh Vora