Rupee falls for third day; taper effect minimal

The rupee fell for a third session on Thursday, in line with emerging market currencies as the US Federal Reserve began its long-awaited tapering, but losses were minimal as the currency is seen less vulnerable on a sharply lower current account gap.

India, which along with Indonesia had to bear the brunt of the summer selloff in emerging market currencies, is considered much better prepared this time because of the sharp rise in reserves, primarily due to $34 billion inflows via two concessional swap facilities opened by the central bank.

Dealers cited some dollar selling by state-run banks in the session, which some said may be on behalf of the central bank.

The partially convertible rupee closed at 62.14/15 per dollar compared with Wednesday's close of 62.09/10. It fell to a two-week low of 62.48 in the session.

In the offshore non-deliverable forwards, the one-month contract was at 62.61, while the three-month was at 63.42.