The rupee was trading weak by 15 paise at 61.39 against the dollar at 3.50 p.m. local time.
The domestic unit shed 14 paise to 61.38 per dollar in the opening trade against the previous close of 61.24 due to increased dollar demand from banks and importers and strengthening of the greenback oveseas.
However, persistent capital inflows into the equity market restricted the rupee's fall.
It hovered in the range of 61.29-61.45 during the morning deals.
On Wednesday, the rupee had ended stronger due to heavy foreign capital inflows and comments on diesel price hike that could reduce the fiscal deficit concerns.
“India should immediately raise diesel prices by about 9.5 per cent or Rs 5 a litre,'' a government panel had said on Wednesday, along with other measures aimed to cut the government’s huge oil subsidy bill.
On the much-awaited US policy meet, the Federal Reserve extended its support for a slowing US economy, sounding a bit less optimistic about growth and saying it will keep buying $85 billion bonds per month for the time-being.
According to Abhshek Goenka, Founder and CEO of India Forex Advisors: "The Fed did not say that tapering should be postponed until 2014. Instead, they will continue to monitor incoming data and assess whether it is appropriate to adjust the level of asset purchases, leading some investors to believe that asset purchases can possibly be reduced this year.
"We believe that there is still a mere possibility of the tapering in December; no matter how small it may be, to be enough to cause a rise in the dollar. The bottom line is that the dollar rallied because the FOMC statement was not nearly as dovish as the market anticipated and even included a few hints of optimism," Goenka said.
According to a public sector dealer, the rupee is likely to see some support with the country’s finances expected to be better placed with a hike in diesel prices.
“The rupee further got a boost after the RBI Governor on Wednesday said that another tightening of interest rates from here on could also lead to over-tightening, indicating no further rate hike expected in the next policy,” the dealer said.
On Tuesday, the RBI had increased the policy repo rate to 7.75 per cent and cut the marginal standing facility (MSF) rate to 8.75 per cent, as was widely expected. It also opened the 7-day and 14-day term repo window to ease liquidity for banks, thereby supporting the market.
