MUMBAI: The Indian rupee is tipped to open slightly higher to the dollar on Thursday, ahead of key data that could help investors assess the size of rate hikes that the Federal Reserve is likely to deliver over the remainder of this year.

The rupee is expected to open at 82.25-82.28 per US dollar, compared with 82.3150 in the previous session.

The intraday volatility on the rupee has come off over the last two days, helped by the Reserve Bank of India’s (RBI) intervention in spot and forwards markets.

The size of intervention on Wednesday was “very little,” compared with the prior two days, but that does not change “the fact that RBI is uncomfortable with more rupee depreciation,” a trader at a Mumbai-based bank said.

“The big challenge for the RBI will come tomorrow if US inflation data surprises on the upside.” US consumer prices are expected to have climbed 8.1% year-on-year last month, while the core inflation rate is projected at 6.5% according to economists polled by Reuters.

The consumer inflation print comes on the back of a higher-than-expected increase in US wholesale prices.

The US producer price index for final demand rose 0.4% last month compared with expectations of 0.2%, suggesting persistent inflationary pressures in the world’s largest economy. In recent weeks, Fed officials have been consistent in signalling that curtailing inflation is a top priority and more rate hikes were needed.

Indian rupee likely flat at open on dollar strength, oil decline

The September meeting minutes released Wednesday showed many officials stressed the cost of not doing enough to bring down inflation.

Meanwhile, India’s retail inflation accelerated in September to 7.41% year-on-year on surging food prices, above the central bank’s upper tolerance level for ninth month in a row and raising chances of further rate hikes.

Asian currencies were trading mixed, while equities were mostly lower ahead of the US inflation data.