Mumbai: The crisis that gripped the Indian financial markets deepened on Thursday, with the currency slumping to a record 65.56 per dollar after minutes of a US Federal Reserve meeting fuelled fears that the US may soon taper its stimulus programme. Fears of an early exit by the Federal Reserve stayed as minutes of the US central bank’s July 30-31 meeting, released on Wednesday, did not give any firm signals on the continuation of the Fed’s bond buyback programme that has increased demand for riskier assets in emerging markets. Investors are anxiously waiting to see when the Fed will start to slow its $85 billion monthly asset purchases, with most predicting September as the beginning of the end of the so-called quantitative easing programme. At 11.48am, the rupee was trading at 65.55 per dollar, down 2.32% from its previous close of 64.04, after testing the 65.56 level. The battered Indian currency is showing no signs of revival from its current levels in the absence of any positive cues to restore confidence in the financial markets, dealers said. This is the fifth consecutive day when the Indian rupee fell to all-time lows. The Indian currency has been the worst performer among Asian currencies since January. The rupee has fallen more than 15% since January, despite a slew of measures from the Reserve Bank of India (RBI) to arrest the drop. Through its measures, RBI has tightened liquidity in the banking system, pushed up short-term rates and brought back partial capital controls to curb forex outflows. But early this week, the central bank said it will infuse Rs.8,000 crore into the banking system through bond buybacks, marking a shift from its monetary stance of last one month. The yield on India’s 10-year benchmark bond rose to 8.62% in the morning from its previous close of 8.415%. At 11.20am, the yield rose 1.69% to 8.556%. Bond yields and prices move in the opposite directions. Stock markets were also under pressure, with the BSE benchmark Sensex shedding 0.42% to 17,830.42 points,. US central bank’s minutes showed that almost all the 12 members of the policy-making Federal Open Market Committee (FOMC) agreed that a change to the stimulus was not yet appropriate. The minutes provided few clues on the potential timing for a reduction but did little to dissuade people expecting a policy change next month. “A few members emphasized the importance of being patient and evaluating additional information on the economy before deciding on any changes to the pace of asset purchases,� the minutes said. “At the same time, a few others pointed to the contingent plan that had been articulated on behalf of the committee the previous month, and suggested that it might soon be time to slow somewhat the pace of purchases as outlined in that plan.

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