Mumbai: The rupee today declined by three paisa against the US dollar to 39.4150/4250 in morning deals following sustained capital outflows and weak equity markets, despite 50 basis points rate cut by US Federal Reserve yesterday.

In lacklustre activity on the Interbank Foreign Exchange (Forex) market, the Indian unit opened steady at 39.39/40 per dollar from yesterday's close of 39.3850/3950 per dollar.

Later, it fell and was quoted at 39.4150/4250 a dollar in late morning deals. Month-end dollar demand from banks on behalf of their clients, mainly oil refiners, to meet the import requirements weighed on the rupee, dealers said.

Global crude oil prices hovered near $92 a barrel in Asian trade today. Sluggish equity markets also pushed the rupee downwards.

The Indian benchmark Sensex tumbled by 423 points to 17,417.63 in late morning trade today, while most of the Asian markets displayed a narrowly mixed trend.

The US Federal Reserve yesterday cut the lending rate by 0.50 per cent to prevent the economy from sinking into recession but could not stem the fall in dollar against major rivals.

Foreign Institutional Investors (FIIs) pulled out nearly $4 billion from equities since January 16,which also impacted negatively on the rupee sentiment.

Source : PTI