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The Indian rupee inched up on Thursday in the wake of a rally in the Chinese yuan, while its realized volatility dropped below 3%.

The rupee was at 82.0350 to the U.S. dollar by 10:46 IST, up from 82.0925 on Wednesday. The rupee all through this week has been hovering around 82.

Following "the decent-sized move" in the prior two weeks, rupee is "back to the old ways", a foreign exchange trader at a bank said. The 10-day realized volatility is now down to 2.7% after climbing to 3.6% last week.

"Now we trade the 81.90 to 82.20 range until the Federal Reserve meeting. Not that big things will happen after that considering little room for surprise."

The U.S. central bank is widely expected to raise rates at its meeting next week. Investors reckon that it is likely the last hike of the current cycle.

The offshore yuan rose 0.7% to 7.1838 to the dollar, boosted by the daily fix and steps taken by the People's Bank of China to make it easier for domestic firms to raise funds from overseas.

China's central bank and foreign exchange regulator said on Thursday that they raised the cross-border macro-prudential adjustment ratio.

Meanwhile, the yuan mid-point was set at 7.1466 against the 7.2233 estimated, a sign that the central bank wants to keep a check on the currency's depreciation.