The rupee was trading weak by 8 paise at 62.20 against the dollar at 12.20 p.m. local time.
The rupee weakened by 28 paise to 62.40 per dollar against the previous close of 62.12 per dollar amid confirmation that the US Federal Reserve will finally reduce its fiscal stimulus programme.
The US Federal Reserve had announced a partial wind-down of its monthly $85 billion bond-buying programme. The US Fed had announced that it will cut its bond purchases by $10 billion to $75 billion from January.
The Fed had further reiterated its commitment to keep the interest rates close to zero per cent and said that the pace of further tapering will depend on the unemployment rate falling below 6.5 per cent.
“The markets were expecting a tapering of $15 billion. So, what we got was better-than-expected,” said Srinivasaraghavan, Head-Treasury, Dhanlaxmi Bank.
Another dealer from a public sector bank said not much volatility is expected going forward. The rupee should trade in the 61.50-62.50 range for the rest of this month.
Call rates, bond yields
The interbank call money rates, the rates at which banks borrow short-term funds from each other, opened higher at 8.9 per dollar against the previous close of 8.75 per cent.
The widely traded 8.83 per cent government security, which matures in 2023, opened lower at Rs 100.5 from the previous close of Rs 100.55. Yield on the security hardened to 8.75 per cent from the previous close of 8.74 per cent.
