The Indian rupee was little changed on Thursday, tracking its Asian peers, even as risk appetite weakened on easing bets of aggressive rate cuts by the Federal Reserve.

The rupee was at 83.1550 against the U.S. dollar as of 10:55 a.m. IST, barely changed from its close at 83.1375 in the previous session.

Asian currencies were mostly rangebound while the dollar index quoted little changed at 103.29, after climbing to its highest level in over one month on Wednesday following stronger than expected U.S. economic data.

Retail sales in the U.S. rose 0.6% month-on-month in December, higher than the 0.4% expected by economists polled by Reuters.

The data sparked a rise in U.S. Treasury yields and prompted investors to further lower bets on a potential Fed rate cut in March.

Investors are currently pricing in a 39% chance that the Fed will keep rates unchanged in March, up from 34% on Tuesday, according to CME's FedWatch tool.

Dollar demand from foreign banks, likely on behalf of custodian clients, contributed to pushing the rupee slightly lower on Thursday, a foreign exchange salesperson at a private bank said.

Benchmark Indian equity indices, the BSE Sensex and the Nifty 50, extended their losses, down by 0.43% and 0.5%, respectively, after logging their steepest daily fall since June 2022 on Wednesday.

While the correlation between pressure on local equities and the rupee has eased, sharp drawdowns certainly stand to hurt the rupee, Apurva Swarup, vice president at Shinhan Bank India, said.

Despite some pressure, the local unit's losses are likely to remain capped near 83.25 levels, Swarup added.

Investors now await U.S. jobless claims data and remarks from Federal Reserve Bank of Atlanta President Raphael Bostic due later in the day. (Reporting by Jaspreet Kalra; Editing by Mrigank Dhaniwala)