Rupee falls to 62.26 per dollar after Fed’s tapering decision.

Mumbai: The Indian rupee on Thursday opened weaker against the dollar tracking losses in Asian currencies after the US Federal Reserve finally decided to cut its monthly bond-buying programme.

The rupee opened at 62.26 per dollar against its Wednesday’s close of 62.11.

Fears are that the reduction in the bond-buying programme in the US will impact dollar inflows in to emerging markets such as India, hence the rupee decline.

Overnight on Wednesday, the Federal Reserve announced that it will taper the stimulus programme next month as it sees an improvement in the US economy. Starting in January, the Fed will spend $75 billion a month on bonds down from the $85 billion now.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.621, up 0.64% from its previous close of 80.105.

The yield on India’s 10-year benchmark bond was trading at 8.79%, compared with its Wednesday’s close of 8.788%.

At 9.10am, the domestic currency was trading at 62.33 per dollar, down 0.35%. India’s equity benchmark Sensex was trading at 20,959.80 points, up 0.48%.

The Reserve Bank of India (RBI) on Wednesday surprised financial markets by leaving the key lending rate unchanged despite high inflation, as concerns over slowing growth in Asia’s third largest economy outweighed price worries in the central bank’s policy agenda.

RBI kept the repo rate, at which it lends short-term funds to banks, at 7.75%. In Bloomberg survey, 26 of 31 economists predicted that RBI may increase the repo rate by 25 bps to 8% from 7.75%, with five economist prediction no change.

Source : livemint.com​