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The Indian rupee will likely not receive much of a boost on Thursday from the further unwinding of long dollar positions fuelled by the relief on the tariffs front.

The 1-month non-deliverable forward indicated that the rupee will open flat-to-marginally higher to the U.S. dollar from 87.4650 on Wednesday.

The rupee declined to an all-time low of 87.4875 in the previous session despite a good day for Asian peers. The Asian FX space has found relief from a pause on U.S. tariffs on Canada and Mexico, and from what analysts say was a measured retaliation by China to U.S. tariffs.

"Yesterday's move was quite surprising, considering that there was negative news (for the rupee)," a currency trader at a bank said.

"Plus, you would think that it (dollar/rupee pair) has already rallied quite a lot, and more upside would require something significant."

The rupee has not benefited from the ongoing unwinding of long dollar positions on optimism that a damaging trade war will be avoided. The dollar index is down more than 2% from the highs hit on Monday.

The index hit a three-week high of 109.88 at the start of the week, as the U.S. looked poised to impose 25% import tariffs on Mexico and Canada, which President Donald Trump later suspended.

The offshore Chinese yuan is at 7.2830 to the U.S. dollar, having dropped past 7.36 on Monday.

RBI RATE CUT

The high likelihood that the Reserve Bank of India will cut rates at Friday's meeting and hedging demand are the reasons cited for the rupee's underperformance.

The rupee is the worst-performing Asian currency year-to-date, down nearly 2%.

KEY INDICATORS:

** One-month non-deliverable rupee forward at 87.64; onshore one-month forward premium at 18.5 paise

** Dollar index at 107.64

** Brent crude futures up 0.3% at $74.8 per barrel

** Ten-year U.S. note yield down at 4.42%

** As per NSDL data, foreign investors bought a net $118.2mln worth of Indian shares on Feb. 4

** NSDL data shows foreign investors sold a net $5.9mln worth of Indian bonds on Feb. 4