Rupee drops sharply as Fed Minutes suggest further tapering

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Rupee drops sharply as Fed Minutes suggest further tapering
The rupee fell 22 paise in early trade and was trading at 62.42 against the dollar, as Minutes from the US Federal Reserve meet suggested that the US Federal Reserve would continue its QE3 tapering programme, unless there was an economic surprise.

Read more on QE3 here

Dealers say that the possibility of further reduction of the Fed's QE3 programme could put pressure on the rupee, as dollar flows through foreign portfolio investment in Indian equities could dry up.

In Sept last year the rupee had dived to a historic low of 68.81 against the dollar following worries that the US Federal would begin tapering its QE3 programme.

However, it has remained resilient in the last few months as the government has managed to bring down the current account deficit.

Read more about: dollar, currency
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