Rupee weakens to 61.39 per dollar as Fed cuts stimulus.

Mumbai: The Indian rupee on Thursday opened lower after the US Federal Reserve further cut its monthly bond-buying programme by another $10 billion to $55 billion per month.

The domestic currency opened at 61.39 per dollar against its Wednesday’s close of 60.96.

The Fed also indicated that interest rates could rise six months after it stops buying assets to exit its monetary stimulus. Investors expect bond purchases to end by September this year and interest rates to increase around April of 2015.

Fed meeting is likely to squeeze liquidity from the US markets, which could possibly lead to investors pulling out from emerging markets such as India. Hence, emerging market currencies such as the rupee, Indonesian rupiah (down 0.72%), Malaysian ringgit (down 0.54%), Philippines peso (down 0.46%) and South Korean won (down 0.45%) have weakened after the Fed meeting.

Since the beginning of this year, the rupee has gained 0.81%, as foreign institutional investors have bought $1.57 billion from local equity markets.

The yield on India’s 10-year benchmark bond was trading at 8.814%, compared with its Wednesday’s close of 8.78%. Bond yields and prices move in opposite directions.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 79.988, down 0.01% from its previous close of 79.995.

At 9.13am, the rupee was trading at 61.31 per dollar, down 0.58% from its previous close, while India’s equity benchmark BSE Sensex was trading at 21,797.61 points, down 0.16%.

Source : livemint.com​