MUMBAI, Aug 3 (Reuters) - The Indian rupee is expected to decline more on Thursday on the back of a selloff in U.S. equities following the downgrade of the U.S. credit rating.
Non-deliverable forwards indicate the rupee will open at around 82.70-82.72 to the U.S. dollar, compared with 82.5825 in the previous session.
The rupee's drop below 82.50 on Wednesday was triggered by outflows, stop losses and weakness in Asian peers, according to market participants.
"Following the unexpected move up (in USD/INR) above 82.50, the bias without doubt is on the upside," a forex trader at a bank said.
"Today, it will be about at what level the RBI (Reserve Bank of India) decides to sell dollars. I have little doubt the RBI will come in, simply based on their past actions."
The S&P 500 Index suffered its worst session in more than three months following an unexpected downgrade of the U.S. credit rating. The safe haven dollar rose against its major peers and longer maturity U.S. yields inched up.
Meanwhile, private payrolls rose by 324,000 jobs last month, the ADP National Employment report showed on Wednesday, well above the 189,000 reading economists polled by Reuters had forecast.
A larger-than-expected increase in U.S. private payrolls, which reinforced the U.S. labor market resilience, contributed to the drawdown in equities and the move higher on U.S. yields.
The "jobs data highlighted upside risks to the Fed funds rate, while the U.S. rating downgrade weighed on sentiment," ANZ said in a note.
Most Asian currencies extended losses and equities were down up to 1.4%.
KEY INDICATORS: ** One-month non-deliverable rupee forward at 82.78; onshore one-month forward premium at 7 paisa ** USD/INR NSE August futures settled on Wednesday at 82.6350 ** USD/INR August forward premium at 6.5 paise ** Dollar index up at 102.60 ** Brent crude futures up 0.3% at $83.5 per barrel ** Ten-year U.S. note yield at 4.11% ** As per NSDL data, foreign investors bought a net $3.1mln worth of Indian shares on Aug. 1
** NSDL data shows foreign investors bought a net $126.9mln worth of Indian bonds on Aug. 1 (Reporting by Nimesh Vora; Editing by Sonia Cheema)
