MUMBAI: The Indian rupee could open slightly higher against the dollar on Thursday, as odds of a 75 basis points (bps) rate hike by the Federal Reserve next month dropped after it published minutes from its last meeting.

The rupee is likely to be around 79.35-79.40 per U.S dollar in initial trading, compared with the previous session's close of 79.4450.

The upside on the rupee is likely capped, thanks to the "wall of demand for dollar at dips (on USD/INR)", a trader at a private sector bank said. He pointed out that the dollar has this week received "very good support" at the 79.20-79.30 level.

Traders will be on the lookout for possible dollar outflows relating to a private equity deal announced earlier this week.

The dollar trimmed its advance against major peers on Wednesday following the release of minutes from the Fed's July meeting that indicated that policymakers were concerned the U.S. central bank could raise rates too far in its bid to tame inflation.

Officials indicated that the Fed could slow the pace of rate hikes in coming meetings while acknowledging that quantum will be capped to ensure that inflation was on a path back to 2 percent.

Goldman Sachs said that the Fed minutes were consistent with their forecast that the FOMC will slow the pace of hiking to 50 basis points in September and then to 25 basis points in November and December.

Odds of a 75 basis points rate hike by the Fed in September dropped to 35%, according to the CME FedWatch tool. The expectations on the size of rate hike will depend on the August inflation data, analysts said.

Most Asian currencies were rangebound on Thursday while equities declined. U.S. equity futures extended the overnight decline.


KEY INDICATORS: ** One-month non-deliverable rupee forward at 79.67; onshore one-month forward premium at 20.50 paise ** USD/INR NSE August futures closed on Wednesday at 79.53 ** USD/INR forward premium as of Aug. 17 for end current month is 6.5 paise ** Dollar index down at 106.62 ** Brent crude futures at $93.6 per barrel ** Ten-year U.S. note yield at 2.88%, India 10-yr bond yield at 7.18% ** SGX Nifty nearest-month futures down 0.1% at 17,945

(Reporting by Nimesh Vora Editing by Dhanya Ann Thoppil)