Non-deliverable forwards indicate the rupee will open at around 82.60 to the U.S. dollar, compared with 82.5475 in the previous session.

"There is not much to read into the likely higher opening (for USD/INR)," a trader said. "Let's hear from the RBI, though I think the outcome is more likely to move premiums than spot."

The RBI is widely expected to keep the key policy rate at 6.50% in its decision at 10.00 a.m. IST. The focus will on comments around the trajectory of interest rates and inflation. A few economists have not ruled out the possibility of the RBI changing its policy stance to "neutral".

A change in stance would lead to "another dip in premiums", the trader said. The 1-year USD/INR forward implied yield is hovering just above its lowest level this year.

The offshore Chinese yuan dropped below 7.1550 to the dollar, the lowest since November last year, on concerns over China's economic outlook. May trade data released on Wednesday revealed a slump in exports, which alongside weak activity data suggested that Chinese growth was faltering.

The jump in U.S. yields on the back of a surprise rate hike by Bank of Canada (BoC) further weighed on the yuan and other Asian currencies.

The BoC, which has been on hold since pausing rates in January, raised them by 25 basis points, prompting a selloff in bonds of major economies.

The 10-year U.S. yield climbed to 3.80% on expectations that the Federal Reserve could retain a hawkish stance when policymakers meet next week. The odds of a Fed rate hike at the June 13-14 meeting inched up to 30%.

The developed market space "got upended" with the Reserve Bank of Australia and the BoC both opting to raise rates against consensus expectations of a hold, DBS Research said in a note.

KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.68; onshore one-month forward premium at 8 paisa ** USD/INR NSE June futures settled on Wednesday at 82.5825 ** USD/INR June forward premium at 5.5 paisa ** Dollar index near 104 ** Brent crude futures down 0.3% at $76.7 per barrel ** Ten-year U.S. note yield at 3.79% ** SGX Nifty nearest-month futures up 0.1% at 18,831 ** As per NSDL data, foreign investors bought a net $134.5mln worth of Indian shares on Jun. 6

** NSDL data shows foreign investors bought a net $1.5mln worth of Indian bonds on Jun. 6

(Reporting by Nimesh Vora; Editing by Sonia Cheema)

By Nimesh Vora