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 The Indian rupee is expected to open higher on Thursday following a further slide in the U.S. dollar on bets the U.S. central bank will most likely cut interest rates in the next quarter.

Non-deliverable forwards indicate the rupee will open at around 83.26-83.28 to the U.S. dollar, compared with 83.3450 in the previous session.

USD/INR had its best day in nearly three months on Wednesday, likely related to monthly currency futures-linked dollar demand, traders said.

For once, "there was a decent move on one side", and "now it looks like it will be snuffed out," an fx spot trader said.

"I think the opening dip (on USD/INR) will see a bit of buying, and offers will pick up in the afternoon."

Asian currencies rose and the dollar index added to the fall during the Europe and U.S. trading sessions on Wednesday. The dollar index, marred by expectations of aggressive rate cuts by the Fed, has lost 2.5% this month and is at the lowest since July.

There is mounting confidence that the Fed will be cutting interest rates in the first quarter of 2024. The odds of a rate cut at the March meeting is now more than 80% and there is a 1-in-6 likelihood of one in January.

A few analysts think that expectations of investors around rate cuts are likely misplaced.

"We believe that the market expectation of 5-6 cuts next year are too aggressive given the current health of the U.S. economy," said Srinivas Puni, managing director at QuantArt Market Solutions.

"New Year data related to US jobs and then inflation are the next major events (for USD/INR."

KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.33; onshore one-month forward premium at 8 paise

** Dollar index down at 100.82 ** Brent crude futures up 0.2% at $79.8 per barrel ** Ten-year U.S. note yield at 3.81% ** As per NSDL data, foreign investors bought a net $64.6mln worth of Indian shares on Dec. 26

** NSDL data shows foreign investors sold a net $117.5mln worth of Indian bonds on Dec. 26