Indian rupee suffered its biggest single-session drop against the U. S. dollar in around two months on Thursday, after the U. S. Federal Reserve chief Janet Yellen indicated an earlier-than-expected end to the quantitative easing program that was launched to stimulate the world's biggest economy in wake of global economic crisis.

The Indian currency slipped by 37 paise against the U. S. dollar to close at 61.33 per dollar on Thursday. On Wednesday, the local currency had closed at 60.96 per dollar.

Following suit, the Sensex shed 93 points to close at 21,740 points. However, the economy managed to attract net inflow of foreign funds worth Rs 722 crore on the same day.

On Wednesday, the U. S. Federal Reserve announced its decision to reduce its bond purchasing program by $10 billion per month starting next month. In her maiden press conference, Yellen said that the central bank would be buying $55 billion of securities per month starting April, down $10 billion from current limit of $65 billion.

Yellen also announced that that the time-frame for increasing interest rates could be around six months after the policy providing easy liquidity ends.

In response to the Yellen's comments, benchmark bond yields in India jumped as the comments triggered fears that foreign investors, who have invested more than $6.2 billion into bond market of the country so far this year, may move their funds from India to the U. S. to earn higher interest. The 10-year gilt yields jumped from 8.77 per cent on Wednesday to 8.82 per cent per annum on Thursday.