MUMBAI: The Indian rupee is likely to open little changed on Thursday amid expectations that US interest rates will remain higher for longer and a pullback in oil prices.

Non-deliverable forwards indicate the rupee will open at 83.52-83.54 to the US dollar compared with 83.5350 on Tuesday.

India financial markets were off on Wednesday.

Brent crude witnessed its biggest one-day decline on Wednesday with worries over demand outweighing Middle East risks, slipping below $87.50 per barrel.

There has been “a decent” pullback in oil from the highs and the dollar has cooled off, a “sort of a relief” for rupee, a forex trader at a bank said. “Against that, risk appetite is weak due to the ongoing Fed repricing.”

The Reserve Bank of India, by regular intervention, has made sure we do not see “huge moves” at open, the trader said.

Investors have dialled down expectations on the number of interest rate cuts the Federal Reserve will deliver this year to two on higher inflation.

Chair Jerome Powell was among several Fed speakers who in recent days have said they would need to see drivers of inflation weaken before cutting rates.

Powell on Tuesday indicated that lack of progress on inflation will mean interest rates may need to remain higher for longer.

Indian rupee hopes to climb past resistance on dollar weakness after Powell comments

Senior Fed speakers have been more guarded in their policy guidance about future rate cuts considering the recent strength in the inflation data, ANZ Bank said in a note.

Traders had who earlier expected the Fed to begin cutting rates in June now reckon a rate cut could be delayed to September.

The rally in the dollar spurred by risk aversion and the Fed outlook took a pause on Wednesday.

Asian currencies recovered, while equities were mostly lower.