The Indian rupee is expected to open largely unchanged on Wednesday, holding below the 84 handle amid risk-off sentiment and a slight pullback in the U.S. dollar.

The 1-month non-deliverable forward indicated that the rupee will open at 84.04-84.05 to the U.S. dollar compared with 84.0375 in the previous session. The local currency on Tuesday caught a bit of relief, helped by dollar sell orders put up by public sector banks, likely for the central bank.

Usually, a drop past a key level, especially one held for a long time, leads to a pick-up in volatility and more losses. For the rupee, however, that has not happened, with the currency more or less holding near 84 after slipping past that level last Friday.

"The complete lack of follow-through after the taking out of 84 further reinforces the environment we are in. That of very low volatility," a currency trader at a bank said.

"We (interbank traders) are just resigned to taking bigger positions and capturing small moves."

The dollar index was marginally lower, pulling back from over two-month highs. Asian currencies ticked higher, boosted by the drop in U.S. Treasury yields. The soft reading of manufacturing activity in New York State alongside the fall in U.S. equities prompted investors to buy U.S. Treasuries.

Asian equities followed Wall Street lower.

Investors are now nearly certain that the U.S. Federal Reserve will deliver a 25-basis-point rate cut at its next meeting, a step down from the 50 bp in September.

Atlanta Federal Reserve President Raphael Bostic said he has pencilled in just one more interest rate reduction of 25 basis points this year. Investors are pricing two 25 bps rate cuts this year.