Rupee down 24 paise against US dollar after Fed rate cut

Mumbai: The Indian rupee opened 24 paise down at 71.36 against the American currency on Thursday after the US Federal Reserve cut its benchmark interest rate.

At the interbank foreign exchange the domestic currency witnessed heavy volatility in early trade. The rupee opened at 71.36 per US dollar then touched a high of 71.15 and a low of 71.37.

On Wednesday, rupee had settled for the day at 71.24 against the US dollar.

The domestic unit pared some losses and was trading at 71.23 against the dollar at 1010 hrs.

In line with market expectations the Federal Open Market Committee lowered the policy interest rate by 25 basis points to a target range of 1.75 to 2.0 per cent.

Forex traders said investors turned cautious after the US Fed dimmed hopes of further rate cuts.

The US Federal Reserve Chairman Jerome Powell downplayed concerns in recent days about a cash crunch in US financial markets and said that the situation says little about the real economy.

Forex traders said weak opening in domestic equities and unabated foreign fund outflows also weighed on the domestic currency.

Domestic bourses opened on a negative note on Thursday with benchmark indices Sensex trading 328.60 points down at 36,325.28 and Nifty lower by 59.40 points at 10,781.25.

Foreign institutional investors (FIIs), offloaded shares worth Rs 959.09 crore on Wednesday, according to provisional exchange data.

Meanwhile, brent crude futures, the global oil benchmark, rose 0.05 per cent to USD 63.63 per barrel.

The dollar index, which gauges the greenback's strength against a basket of six currencies, fell by 0.09 per cent to 98.47.

The 10-year government bond yield was at 6.59 per cent in morning trade.