The rupee pared most of its losses during the day to close at 62.12 against the dollar on reports that the US Federal Reserve’s tapering is going to be more gradual-than-expected.

The rupee’s close on Thursday was only a tad lower than the previous day’s close of 62.09.

Between Wednesday’s close and Thursday’s open, the US Federal Reserve announced a partial wind-down of its monthly $85 billion bond-buying programme. The US Fed announced that it will cut its bond purchases by $10 billion to $75 billion from January.

The Fed further reiterated its commitment to keep 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.

As an immediate reaction, the Indian unit opened weaker at 62.25 and then further weakened to 62.47 in intraday trade.

“The rupee’s fall earlier in the day was in line with that of other global currencies against the dollar,” Srinivasaraghavan said.

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 ease

The interbank call money rates, or the rates at which banks borrow short-term funds from each other, closed lower at 8.75 per cent from previous close of 8.90 per cent.

The widely traded 8.83 per cent government security, which matures in 2023, closed higher at Rs 100.55 from the previous close of Rs 100.25. Yield on the security softened to 8.74 per cent from previous close of 8.78 per cent.

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